Reasons to Use Your Credit Card
Section 75 Cover, Cash Advances, Pay Household Bills, Earn Cash Back
Apr 26, 2009
Charge cards are often associated with debt problems, but they offer a real upside. Many families would struggle to pay their household bills each month; others wouldn't be able to cover their mortgage payments without a credit card cash advance. Cardholders are often unaware that they enjoy protection under section 75 of the Consumer Credit Act 1974 and can even benefit from credit card rewards at the same time.
Credit Card Rewards
Customers that use their card regularly are able to enjoy credit card rewards, such as cash back or free airmiles. Simply paying for everyday goods and services using a charge card can earn customers various incentives. American Express (AMEX) currently offers customer 5 per cent cash back for the first three months and 1.5 per cent thereafter. However, it is important that all customers clear their debt at month end or perform a credit card balance transfer.
Credit Card Balance Transfers
Individuals that have used their charge card to cover household bills should consider performing a credit card balance transfer. Virgin currently offers 16 months interest-free credit on balance transfers. This means that a consumer struggling with £5,000 of credit card debt at 17.92% APR could save £896 per annum by making a switch. There are financial institutions offering interest-free personal loans.
A Credit Card Cash Advance to Pay the Mortgage
Many consumers still have access to a charge card, yet have a bad credit rating. An adverse payment history drives-up the cost of borrowing and makes credit completely inaccessible for others. When paying for household bills or the mortgage isn't possible, consumers are able to get a credit card cash advance from their ATM or use a credit card cheque. Whilst the APR is higher and further charges will be incurred, it may be cheaper than other borrowing sources available.
Section 75 Consumer Protection Act 1974
Consumers are given full protection in respect of any misrepresentation, breach of contract or merchant insolvency under section 75 of the Consumer Protection Act 1974. This covers all credit card purchases valued between £100 and £30,000. The consumer has the option of either reclaiming the money from the merchant or card provider.
Provided that a charge card is used sensibly, it can help consumers escape tight financial situations with respect to the payment of household bills. Customers can even accumulate credit card rewards, such as cash back or free airmiles, in return for their loyalty. Any purchases over the value of £100 enjoy protection under section 75 of the Consumer Credit Act 1974.
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