Two in five shoppers are not intending to use credit cards at all for Christmas shopping this year, new Which? research has found.
Most of the 2,000 shoppers questioned said they will use a mix of cash and cards, or cards only, when doing their Christmas shopping this year, but 37% said they’re not intending to use credit cards as part of their payment options.
Credit cards offer extra protection to claim against your provider if things go wrong. Which? explains your rights and how to use credit cards responsibly this Christmas.
Section 75 protection with credit cards
Under Section 75 of the Consumer Credit Act 1974 the credit card company is jointly and severally liable for any breach of contract or misrepresentation by the retailer or trader.
For example, this means you wouldn’t have to reach a stalemate situation with the retailer over a faulty product dispute before you could contact your credit card provider to make a claim.
The research showed the planned use of credit cards steadily increase within each age group.
Only 16% of 18 to 24-year-olds plan to use a credit card as part of their Christmas shopping, whereas 42% of over-65s do plan to.
Chargeback protection rules with debit cards
The research also showed that the younger a shopper is, the more likely they are to pay with a debit card rather than a credit card.
But, as Section 75 applies only to credit cards and not to debit cards or charge cards, debit card users wouldn’t be able to claim money back from their provider. But debit card users may be able to use chargeback instead to get some or all of their money back.
Chargeback lets you ask your card provider to reverse a transaction on your credit or debit card where the cost of the goods or services are less than £100.
When to use credit cards
While we wouldn’t recommend using a credit card for every purchase, it may be worth considering using a credit card if you plan to buy big-ticket items for Christmas this year – such as a new phone, TV or a cosy new mattress.
It’s also handy if you’re considering buying something from abroad, as it applies to foreign transactions as well as goods bought online, by telephone or mail order for delivery to the UK from overseas.
Aside from offering you Section 75 protection, credit cards have other advantages.
If you’re hoping to take out a substantial loan in the future – for example, to buy a house – you’ll need to establish a track record of using a credit card, which is measured by your credit score. Paying by credit card and then clearing the debt in full will help build this up over time.
Some credit cards offer rewards, including cash back or air miles – the more you spend, the more benefits you can earn.
Credit cards can also help you manage your cash flow. Payment will be due more than a month after purchases were made, so you may be able to delay paying for big-ticket items until after the Christmas crunch.
But you need to make sure you don’t spend more than you can afford to pay back.
While credit card companies allow you to make a minimum payment, your credit score will be damaged if you don’t pay off your balance in full each month. You’ll also end up paying interest on the balance, which will cost you more the longer you carry it.
If you have credit card debts, you’re less likely to be approved for loans – banks will take into account any outstanding debts when deciding how much to lend you.
Top tips for using credit this Christmas
- Plan out what you want to buy in advance.
- Make sure your card provider is giving you the best deal.
- Use credit cards online or in other ‘risky’ situations to get Section 75 protection.
- Keep track of purchases as you make them (and when they’ll be due).
- Manage your cash flow to ensure you can repay your debts.
The research referenced was carried out by Populus on behalf of Which? among 2,089 residents of the UK online between 6 and 7 November 2017. Data was weighted to be representative of age and gender of residents in the UK.