Age-net finds out what added protection credit cards are and if they are really worth it
When you’re on the highstreet, the traditional way of paying is to pay by cash. Since that’s impossible online, the next best thing to cash is your debit card.Or is it?
Debit cards are the plastic equivalent of cash. As soon as you use it to pay for goods, the money is deducted from your bank account. So before you swipe your debit card, be sure you have enough available funds. Otherwise, your next bank statement will show an insufficient funds fee. Although that is dependent on the agreement you have for your account. It is possible to have an overdraft you can dip into, but that may have fees attached to it too.
If you don’t have funds, don’t use the debit card!
The best card for the highstreet
Some of the cost that businesses have for accepting credit card payments is passed along to you.
You’ll know when this is happening beforehand as there is (or should be) a sign that tells customers something like – minimum spend of £5 required for debit and credit card payments. Or 2.5% card processing fee applies.
Paying by debit in most highstreet stores do not usually have charges, and that’s partly because there aren’t any extras you get from the bank for using the card. If you have a credit card though, you really should know the extras you have, as there’s often more than just the ability to pay conveniently. You should check the contract and terms for any credit cards, as there may be additional perks that could save you money.
The reason for this is that when you buy large appliances (white goods, televisions etc.) you might find you have an additional warranty if you pay for the purchase using the credit card.
However, if you do chose to pay by credit card, there’s a high likelihood that there will be a processing fee attached to the purchase.
If you’re paying £500 for a new cooker via credit card payment, you could have a 2.5% processing fee attached to that. In essence, that would cost you £12.50 for an extended warranty, but you would need to know ….
- If your card provider has additional benefits for using your card
- If you are going to be able to pay the balance straight off when the invoice arrives
Obviously, to take advantage of any rewards from credit cards, you need to be in complete control of your finances.
If you’re spending and allowing your balance to accumulate, you’ll be racking up interest charges left, right and centre, defeating any benefit attached to the card, and therefore doing nothing for you, other than racking up your debt.
This is why debit is the preferred payment card option for many. If you don’t have it, you can’t spend it.
Your debit card is as good as cash, but only when you’re on the highstreet and your purchases are under £100. Anything over that amount, you have added protection when you pay by credit.
When you’re shopping online the credit card’s best for any amount, because they provide you with full liability against fraudulent transactions, and with most banks, you have zero liability if anything does happen.
To ensure your credit card is safe, the credit card providers continually monitor accounts and are able to flag any suspicious activity immediately. This is not only great for you when you’re shopping online, but when you travel abroad, you also have that added security blanket.
Fraud Protection Abroad
Tourists can be caught out abroad by a dodgy cash machine where its only purpose is to harvest the information on your credit card and use that information to commit fraud. If that were ever to happen, you’d be covered by credit card provider.
The other thing you are protected against is the loss of your card when you’re away.
If you’re on holiday, lose your card, you call the company to cancel it. If someone else has tried to use that card, which is not the same as how you would normally use it, the company flags it as suspicious activity and freezes the account.
This can also happen if you keep a credit card solely for use when travelling abroad just to have that added security. If the card sits in a safe for a year, then all of a sudden there are daily purchases and cash withdrawals occurring, it is likely going to flag and the account will be frozen, even though it is you who is using it.
For that reason, if you plan on spending more than usual on the card, or using it other than you normally would; you should notify your card provider in advance, but if not, at least make sure you have their number before you travel abroad.
Online Protection
As online shopping has grown, more payment methods are being accepted. Worldpay, PayPal, credit & debit cards, and e-gift vouchers.
With all the payment options open to you, what’s the best and why?
Agenet Explores Payment Options
Paypal
The preferred payment gateway for eBay purchases, and might be just Paypal’s largest client. Asides from eBay, there’s a magnitude of other businesses that accept Paypal payments.
Ebay is the world’s largest auction site, and it’s click easy to pay by Paypal, but are they your best option?
Paypal secures payments, and ensures that all transactions are legitimate, but they do not take the whole brunt when things go wrong.
You must shop responsibly for maximum protection.
When you buy anything on ebay, you aren’t buying from that company. You are buying from someone registered to sell on that website.
It’s like when you go to a market. People pay for the stalls, but you can’t go back to the person who owns the premises where the market took place and get a refund or exchange.
You need to deal with the seller of the product, and that’s where ebay and paypal come in.
The first thing to know about ebay is to always check the seller profile. You want to see they have plenty of feedback, and are a registered trader. Registered traders on ebay are recognised as business owners, and therefore you have added protection that you do not have if you were to buy from someone who just does an annual clearout.
Once you buy, both eBay and you have the contact information of the person you bought an item from. If you paid by Paypal, they will also have the details of the financial transaction and that information covers you with their Buyer Protection – provided your account is in good standing. Although if there is a dispute, you have 6 months to open it.
Any complaints after 6 months, you’re not covered, so if you buy a brand new washing machine and pay through Paypal, you only get an additional 6 month buyer protection, which in essence could be used as a warranty. Although the company could dispute that on the grounds that the equipment was in working order when you received it.
They cannot do that with a credit card payment.
The Credit Card
The credit card provides added protection on goods that cost over £100 and below £30’000. But for online transactions, purchases under £100 are also covered.
A simple way of explaining this is that when you pay by credit card, the credit card company pays for the goods and not you. You pay them, after they pay the retailer; so in essence, the credit card company is the customer who bought the item.
When things go wrong with a purchase you made and paid with your credit card, you are protected under Section 75 of the Consumer Credit Act.
Under that section, you are entitled to make a claim against your card provider. In most cases, you’ll have your money refunded, and it’s then up to them to chase the money back from the retailer.
This also applies if a company goes bust and you need to make a claim. You can claim the credit card firm when a retailer has gone under.
Pay by Credit for Extra Protection
…Just stay in control of your finances!
Credit cards are definitely a good way to add protection to your purchases, both online and on the highstreet. Just remember to keep on top of your finances so you never fall into the trap of spending more than you can afford to pay back.
One other thing to note about protecting your purchases this way is that even if you pay a deposit by credit and settle the balance by paying by cheque and in full later, then because you deposited through the credit card company, your entire purchase is covered and not just the balance that you put on the card.
Next time you’re thinking paying cash for a car, or any large purchase – pay the deposit on credit, and the balance in full. It gives you that extra bit of protection knowing your credit card company has you covered.
