Card protection for credit cards
Not everyone will be aware of it, but your credit card automatically comes with in-built insurance that will protect you when making certain purchases. The insurance kicks in when spending over £100, and you are protected by law. So if you receive an item that is faulty, that isn’t as described, or if something never arrives, there’s no need to panic – you are covered. Let’s look more at credit card protection.
The reasons behind card protection
So why do cards offer such protection? Is credit card protection of much use? Well basically card issuers offer it for one simple reason. Because they have to, due to legislation, namely the Consumer Credit Act. Under Section 75 of this Act, credit cards must provide protection for purchases above £100 and below £30,000. The Consumer Credit Directive bumps up this protection from £30,000 to £60,260.
Importantly, debit cards do not offer this protection, which is one reason why it can be a good idea to pay for things with your credit card instead.
Purchase protection
Some credit cards come with additional protection not available to users of debit cards. Many (but not all) offer purchase protection, which means that if you buy something on your card and it is stolen or lost within a set period of time (usually around three months), the credit card will refund you.
As always, check the terms and conditions on your card to see if such protection is applicable to you.
Extra protection
A few other cards, though it is far from all, also offer free identity theft cover, which will protect you against someone stealing your identity and running-up credit card debts in your name. This kind of cover typically provides a couple of free credit checks a year, so that you can check to see if there is anything suspicious appearing on your personal report.
Payment protection insurance (PPI)
There is another type of protection that has been hogging the headlines for some time now – namely payment protection insurance, which you may know better as PPI. For some time now this has been sold alongside cards offering to meet your repayments of you struggle to do so, say for example if you lose your job.
Unfortunately, many PPI policies were mis-sold in the past to people who wouldn’t be eligible to claim, so were paying for nothing – for example, because they had pre-existing medical conditions, or were self-employed – and so have received a great deal of negative press, and a huge series of claims have been processed since this became common knowledge. The period for claiming back mis-sold PPI is coming to an end shortly, so act now if you think you are owed money.
Protection can be a lifeline
However, provided you understand exactly what you are signing up for, as well as the costs involved, this kind of cover can provide a lifeline if your income suddenly dries up because of illness or redundancy, and you don’t have a partner who can cover bills while you can’t. Do not assume that that PPI is automatically a bad thing, as it is suitable for some – just check the terms, do your homework, and make sure that if you do take out this insurance, you would be eligible to claim if necessary and thus aren’t wasting your money.
