I Want Free Warranty for Valuable Goods

Now and again, I get offered a guarantee certificate or extended warranty for valuable purchases, such as electrical goods. But these warranties are often not worth the paper they are printed on if making the purchase via a credit card, as well as the rules as set out by the Consumer Protection Act.

Credit Card Advantages

You can save money on warranties on big purchases if you use a credit card. So long as the purchase is worth more than £100, and the down payment is at least £100, you are automatically protected against things a warranty would normally cover. Furthermore, the consumer is protected under the Consumer Protection Act which must offer a limited warranty with the product which must reach a certain standard and durability.

Free Insurance for Valuable Goods

But purchases with a credit card give free warranty against things not covered by the Consumer Protection Act. This “creditor debtor agreement” is set out under Section 75 of the Consumer Credit Act, which reads as follows:

“75. — (1) If the debtor under a debtor creditor supplier agreement falling within section 12(b) or (c) has, in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, s/he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor.” (Section 75 of the Credit Consumer Act, 1974)

This means that any purchases made with a credit card (of an item worth more than £100 and less than £30,000), the creditor is jointly liable with the retailer against the following happening:

• Non delivery.
• Damage.
• The issuing company going bust.
• Cancellation of flights.

In such circumstances, the credit card company must offer a refund by law.

Free Protection for Consumers

It must be stressed that in order to benefit from free protection when spending on valuable goods, the purchase must not be made via a debit card, charge card, credit transfer or purchase through a third party such as a travel agent or Paypal. Needless to say, cheques, cash or vouchers will not do either. A credit card purchase makes the relationship between the transaction and the item clear.

I Want my Credit Card to Work Harder

Using a cashback credit card when making the purchase means the consumer may get some money back. This is good news for the consumer, as the item is made cheaper and a free warranty is obtained too.

But do watch out for the hidden danger of overusing the credit card which could lead to becoming overdrawn. Credit cards charge extortionate interest rates, which would ruin any benefits reaped. Ensure that a standing order is arranged to ensure the credit card balance is paid in full every month.

Easy Refunds on Goods with Credit Card Purchases

Who needs an extended warranty or extra insurance for valuable goods if the purchase is through a credit card? Doing so means the consumer can make a Section 75 claim if the goods get broken, lost, flight cancellations or if the issuer goes bust. Combined with the Consumer Protection Act, the consumer may be wise to refuse the offer of buying extra warranties, which may be superfluous.

Links to Section 75 Claims for Consumers

“Credit Cards, Equal Liability Under Section 75 of the Consumer Credit Act, 1974” Financial Ombudsman Service (FOS)

Photo credit: Peter Facey