How to protect your finances this summer

If you’re about to book your summer holiday and want to make sure you’re financially protected if something goes wrong, your credit card can give you this cover.

Whether the travel company you book through goes bust or fails to deliver what it promised, if you pay by credit card your provider is equally responsible for giving you a refund. This protection falls under Section 75 of the Consumer Credit Act 1974.

To be eligible to make a claim under Section 75, any single item or service you pay for using your credit card must cost between £100 and £30,000. However, the full amount does not have to be paid on your credit card. For example, if your package holiday comes in at £600 and you pay your £50 deposit with your credit card and the remaining £550 by cheque, you are still protected – provided the whole payment went to one retailer. Under Section 75, it’s the overall value of the goods that’s key – not how much is paid on the card.

However, there are some things to look out for. Because Section 75 only covers you for single purchases, unless you book a package deal, you might not be protected for the individual elements of your holiday if they are each provided by a different retailer. For example, if you spend £150 on travel and accommodation together, but each service individually costs less than £100, you will not be covered – unless the retailer has bundled them together as part of a deal.

Also, it is essential to ensure you’ve purchased travel insurance – Section 75 cannot help you if you need to cancel or have had any items stolen.

It’s also worth knowing that if you paid for your holiday on a credit card but have since closed the account and now want to make a claim, you are still protected. You are also covered for any credit card transactions that you make abroad (providing that they are the equivalent of £100 or more).

If you’re unfortunate enough to need to reclaim your holiday costs, approach your credit card provider immediately – you don’t need to speak to the travel company you’ve booked through first. And keep in mind that if you make a claim against both your credit card provider and travel retailer, you will not be able to double-up and recover costs from both.

Is there a time limit?

There is no time limit specific to Section 75. However, the statute of limitations in the UK is six years, so this is a general deadline that must be abided by. After this period has passed, you will not be able to take any action in court.

How to make a claim

Although your credit card provider is jointly liable with the retailer, it is usually easier to contact the retailer for a refund in the first instance.
To make a claim through your credit card firm, simply call them and state that you want to make a claim under Section 75 of the Consumer Credit Act. They will then send you a form that you’ll need to fill in and return.

Are there any drawbacks?

If someone has an additional card on your credit card account, the goods or services they buy with it will only be protected if you can prove that the purchase had some form of benefit to the primary card holder. For example, if they book two flights – one for themselves and one for the primary card holder – their purchase would be protected. However, if the second flight they booked was for their partner, friend or family member – or anyone who is not the primary card holder – they may not be protected under Section 75.

You will also not be covered for cash withdrawals. So, for example, if you use your credit card to withdraw £150 from an ATM to pay for entertainment or an excursion while you’re away and something goes wrong, your cash withdrawal will be not be protected.

Some companies will charge an additional fee if you’re booking holidays or flights using a credit card, so make sure you are aware of this and check exactly how much extra you will be charged.

Lastly, when booking a break, always make sure you book through an ABTA travel agent or ATOL airline or tour operator – this is a key consumer protection if the holiday company you booked through goes bust.

Ian Williams, spokesperson for Ocean credit cards, says: “When we’re caught up in the excitement of booking a holiday, it’s easy not to think ahead and prepare for what could potentially go wrong. Paying on credit card can give you that extra bit of security and peace for mind in case the worst happens. While we hope no-one has to go through the hassle of claiming a refund for a holiday that’s turned on its head, it’s always best to be prepared.”