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

I’m Deep in Debt. What Are My Options?

When faced with insurmountable debt, the borrower will need to know the options available. Getting in touch with a non-profit debt counsellor such as National Debtline or the Consumer Credit Counselling Service will provide answers, but in simple terms, there are several clear cut choices. These are:

Informal Arrangement with the Creditor

Negotiating an agreement with the creditor on a payment plan follows no guidelines and depends upon the creditor concerned, the debtor’s circumstances and the amount owed. But basically, the debtor, (often with the support of a debt counsellor) will agree on the monthly amount to pay back and the time frame. The amount could be as small as £1 per month over any time period. However, the debt is often written off after six years. It must be borne in mind the creditor or acting debt collector may contact the debtor at any time to question whether there has been any change in circumstances. The debtor must issue a letter proving monthly disposable income to prove either way.

Debt Management Plan with Creditors

The second option is to negotiate a formal agreement with the creditor, known as a debt management plan (DMP). Again, this will involve the support of a debt counsellor. To use this option, the debt needs to be at least £5000, involve at least three creditors and the monthly repayments must at least £100. The payment is made to the debt management company who then shares it between the creditors. Often, it is the creditor with the largest owed that takes the biggest share.

Individual Voluntary Arrangement

An individual voluntary arrangement (or IVA) is an agreement made through a county court and often involves debts of over £15,000, as the cost of setting up an IVA for chasing an amount of any less would not be cost effective. The payment period is usually over five years.

Declaration of Bankruptcy

If the amount owed is £750 or more, the creditor may petition for bankruptcy. The bankruptcy period lasts for one year after which the debtor may make a fresh start but subject to restrictions. The debt is written off if it can be proved there are no assets or funds available to pay it off. The remaining assets are shared fairly between the creditors.

Debt Relief Order

The fourth option, the debt relief order (DRO) can be applied via the official receiver if the debts are under £15,000 and disposable income amounts to less than £50 per month. Owned assets must be small, less than £300, and car, valued at less than £1000. The debt is written off after a year’s period.

Will Asking the Creditor to Write Off the Debt Work?

The final option is to simply ask. The National Debline and Payplan debt advisers provide stock letters for debtors to issue to creditors. These ask for the debt to be written off or to be reduced if it has been proved that the debtor is simply unable to pay it back. Some creditors may agree to do this, but some may not. If the latter is the case, the debtor may invite the creditor to take the matter to court.

Getting Debt Written Off

Sorting out debt problems initially involves the consultation of a debt adviser. What follows is often a long line of correspondence between the creditors, the creditor’s debt collection agency, the debt counsellor and the debtor. The best thing to do is to consult the debt counsellor on the best option. Keep a record of all correspondence, and any unfair practices on the creditor’s part. This will not bode well for them if the matter goes to court.

photo credit: Pafcool2 from Wikimedia Commons

I Want to Erase all My Credit Card Debts Quickly and Legally

Having witnessed how credit card debt can get out of control myself, I have learned that the only way to clear credit card debts is to face the debt monster, research into my legal rights and get help of the best debt counsellors.

Credit Card Misery

Credit cards have a good side and a bad side. The good is that they protect purchases of up to £100 under the consumer credit act, and that cashback cards are great for making money on purchases as well as getting perks. But borrowers are often seduced into borrowing more money and increase spending. What may at first be a convenience could spiral into massive arrears thanks to late bank charges, admin fees and borrowing rates that could make your eyes water. It is small wonder the borrower feels increasingly trapped and wishes it would all just fade away.

Steps to Clear Credit Card Debts

Only radical steps can put a stop to the credit card debt from snowballing out of control. The first is facing it. This means talking to a partner or friend. The next step is to gather all information about the debt. This means getting bank statements and credit agreements out of the dusty drawer and facing the monster. Don’t worry, it is rather like pulling a plaster off quickly. The pain is sharp, but fleeting. Establish the following:

• The size of each debt.
• The details of the debtors.
• Which debts must be paid off first.
• The interest rates of each debt.

The next step is contact a debt counsellor. By visiting the Citizen’s Advice Bureau, I was put in touch with the best debt counsellors.

The Only Debt Counsellors You Should Use

I found the following non profit credit card counsellors to be the best.

• Citizen’s Advice Bureau (CAB), the ideal first step to getting in touch with the best debt advisers.
• National Debtline (NDL), the best telephone contact when discussing debt problems. They also provide simple to understand factsheets about your rights when in debt, including template letters to debtors and debt collection agencies.
• Consumer Credit Counselling Service (CCCS), a must for those in credit card debt.
• Payplan, a free of charge debt management company. They are experts at drafting a debt management plan (or DMP) which is a sort of contract between the borrower and the lender on a more affordable way of paying the debt. An informal agreement between the creditor and the debtor could be negotiated for repayments of as little £1 per month. This gives the borrower the space to find a way of getting the debt written off.

Other bodies worth contacting are:

• Financial Ombudsman Service (FOS)
• Office of Fair Trading (OFT). Both the OFT and the FOS keep a watchful eye for unfair debt collection practices and procedures, which will not look good for the lender if the matter goes to court.
• DirectGov, offering advice on benefits that can be claimed via an online calculator.
• Money Saving Expert, offering the best financial advice online.

How to Write to Creditors

Getting debt written off involves going through a step by step process of writing to debtors, but don’t worry, the Citizen’s Advice Bureau and the National Debtline provide stock letters and easy to follow instructions for the borrower to follow. In legal terminology, these letters request that part or all of the debt be written off. A refusal from the lender means the borrower can invite the lender to take the matter to court, which could be costly for the lender. This may bode the question, is the cost of chasing the debt worth the value of the debt itself? The argument could be more in the borrower’s favour if the lender has violated any of the borrower’s rights as set out by the Office of Fair Trading (OFT).

Let’s look into the borrower’s rights in more detail.

The Rights of the Borrower

With the support of free legal advice from debt counsellors, the borrower can establish the following with the view of getting debt rubbed out.

Has the lender missold a loan agreement? Look out for inappropriate selling of payment protection with the personal loan, which the borrower did not ask for. Look out for discrepancies or obscurities on the loan agreement. Has the lender been transparent about the APR and their calculations of the debt? Are there any inaccuracies on the loan agreement? Has the original document gone missing? Admin errors can result in the borrower paying the wrong debt.

Has the lender been heavy-handed with chasing the debt, such as harassing the borrower by telephoning at work or during unsociable hours? Has the lender’s agents made unannounced calls to the door or using threatening behaviour? If this has been the case, the debt collection agency could have their licence revoked.

Some or all of these matters would be of interest to the Office of Fair Trading (OFT) and the Financial Ombudsman (FOB). Furthermore, the judge will frown upon bad practices it if the matter goes to court.

Credit Card Debt Removal

Although eradicating debt is not always as simple and quick as we wish, gaining space through a DMP via Payplan or similar non-profit debt counsellor is the best first step. The borrower may then follow a simple procedure of writing letters to the creditors, get free legal advice and establish how much powers the creditors actually have if the matter goes to court. The costs of retrieving the money could be more than the debt is worth, particularly if the lender has violated any of the debtor’s rights. In this respect, eradicating debt is often a waiting game.

Photo credit: Errefe from Wikimedia Commons

I Want to Get Money Back from My Credit Cards

Credit cards get blamed for the worst debt, but it is possible to reverse their effect when earning money back for shopping with cashback credit cards. This can make bargains even cheaper, as I get money back every time I buy a holiday, an insurance premium or high street goods.

Make Money from Credit Cards

Imagine bagging a bargain in the high street, only to better it when getting more money through purchases? Well this is made possible through the very thing that can cause the worst debt, the credit card. But care must be taken when using them, as they can sting you if you don’t keep an eye on them.

How Credit Cards can make you Better Off

The dea works because credit card companies want consumers to spend, spend, spend and spend again. The incentive is rewards and cashback. The way this works is that every time the credit card holder spends money, money is given back. With craft and diligence, lots of money can be saved on big purchases, such as kitchen units, a big holiday or Christmas shopping.

How to Take Revenge on the Credit Card

To make this work, the credit card holder must make sure that the credit card balance is settled in full every month and on time. If this does not happen, and this is the sting in the tail, the credit card company will slam late payment fees and extortionate borrowing rates onto the credit card holder. This is how they make their profits. To prevent this from happening, it is imperative to have a direct debit in place, as I do.

The other cardinal rule is, never ever borrow money from a credit card, as this will cost the borrower dearly, and make the whole exercise pointless. For this reason, think carefully before using a credit card if there is a cash flow problem, as borrowing the money could become a temptation.

Play the Credit Card Game to Earn Rewards and Cash

For the credit card game to work, use it only to make purchases, not to borrow money. But don’t feel tempted to buy just for the sake of it, as this could snowball into unnecessary spending and possibly debt. The best rewards are reaped when making purchases I would normally have to make anyway, such as household appliances or car repairs.

Free Warranty on Goods under the Credit Act Section 75

The other great thing about purchasing goods with a credit card is that the purchase is automatically protected, as the card issuer is equally liable for things going wrong. So long as the purchase is worth more than £100, the consumer is protected against breakages, loss or the company going bankrupt.

What Equates to a Good Cashback Credit Card?

In this buoyant market, deals are constantly changing, and no doubt, as soon as I’ve written this, new deals are coming on the market, which is why it is wise to keep looking for new cashback credit card offers. But an earning of around 50p for every £100 spent is about the norm. Anything better than this is worth looking into. Some credit card lenders also offer additional perks, such as shopping vouchers, free gifts and air miles.

Some credit card lenders offer a high cashback rate for a limited time frame or dependent upon the amount the consumer spends.

Alternatives to Cashback Credit Cards

But getting such rewards on purchases are on the condition the holder’s credit score is intact. In this instance, debt could be a problem. Applying for a 0% interest rate credit card is a better option. This will ensure against late payments and defaulting.

The Drawbacks of Cashback Credit Cards

It is wise to apply for a cashback credit card only if large purchases are likely, such as moving home, Christmas shopping, a wedding or a family holiday. Beware that a period of dormancy of over a year could cost the card holder a penalty. As I have said, credit card companies want you to spend, spend and spend again, which leads me to the other drawback. Don’t spend for the sake of it. Always read the small print. If cashflow is a problem, it might be wise to postpone signing up for a cashback credit card.

Cashback Credit Cards Made Simple

• “Cashback Credit Cards” Martin Lewis article on MoneySaving Expert

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