Contents Insurance: Plastic purchases offer extra protection

You may be able to claim from your credit card issuer if you have bought a faulty product

CREDIT CARDS which have gone into overdrive during the festive season, will be heavily used again during the January sales. In the frenzied period of spending, customers should not forget the added protection that credit cards provide.

Under the Consumer Credit Act, credit card companies are jointly liable with suppliers if there is a problem with goods and services which have cost pounds 100 or more, and have been purchased wholly or in part with a credit card.

John Bridgeman, the Director General of the Office of Fair Trading (OFT) describes this as "one of the most useful consumer protection laws".

"It enables shoppers to make a claim from a credit card issuer if a supplier goes out of business, or otherwise fails to give satisfaction," he says.

Claims are not limited to the cost of the goods or services - unlimited consequential damages are also covered. For example, if you pay for a faulty carpet cleaner by credit card, and the cleaner ruins the carpets in your home, you can not only claim against the retailer and the credit card company for the cleaner, but also for the cost of replacing the carpets.

But the law does not apply to transactions over pounds 30,000, to cards held by businesses, or to personal cards where the credit limit is more than pounds 25,000.

Opinion differs as to whether the Consumer Credit Act covers transactions abroad. Not all credit card companies will settle a claim on a purchase made outside the UK.

If you pay for something by credit card and you learn that that the supplier has gone out of business, you should write to the credit card company immediately. Enclose a photocopy of either the voucher you signed, or the statement showing the transaction with your letter. If these are not available, give details such as the date and amount of the transaction.

What should you do if the goods you have ordered by credit card are faulty or do not arrive. The OFT says: "It is sensible to approach the trader first. You can, however, make a claim against the credit card issuer without going to the supplier first."

A spokesman for Barclaycard says many claims which it receives are not clear-cut. "Take the case of the dead parrot. A person buys a parrot from a pet shop, it becomes ill and dies. How can we act as judge and jury?"

This may have overtones of Monty Python and dead parrot jokes, but both Barclaycard and HSBC have experienced such claims.

In the HSBC case, the post-mortem revealed that the purchaser had fed the bird unsuitable food. As the cardholder had not been sold a sick parrot, the claim failed.

While all credit cards have built-in statutory protection, some also offer insurance against loss, theft or damage. There is usually there is a lower limit for a claim - pounds 50 in Barclaycard's case. Woolwich cardholders can claim for losses or damage to purchases at pounds 25, and with some gold cards, there is no lower limit.

Whereas Barclaycard limits claims to pounds 1,500 per item, others place a ceiling on the value of total claims for a 12-month period. With some gold cards this can be as high as pounds 20,000. In all cases the period of cover is limited to a number of days after the purchase - usually 90 to 100. But all schemes insist that the claimed-for item is not covered by another insurance scheme.

More than half of the claims received by Barclaycard are for sunglasses and clothing. Typically, in these cases, the glasses have been left on the beach, while the customer has left the carrier bag containing their new clothes behind on public transport on their return journey from the shops.

One credit card issuer received an unusual claim for a central heating boiler after the cardholder had driven it home in the back of an estate car.

The boiler was stolen in the few minutes the cardholder had left it while he was seeking help to lift it into his home.