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What is the Consumer Credit Act?

credit card use

The Consumer Credit Act requires most businesses that offer loans to consumers or goods or services on credit to be licensed by the Financial Conduct Authority (FCA).

It empowers the consumer and also protects them when they make a purchase using their credit card.

Purchase protection

Section 75 of the Consumer Credit Act protects you for purchases using a credit card. It does not protect you if you use a debit card, (whereby you will have to use a chargeback from your debit card provider to get your money back).

If your purchase is damaged or not as advertised, credit card companies and retailers have to take joint responsibility and, if the retailer doesn’t pay you back, then the credit card company will.

Please note –

  • purchases are only guaranteed between ¬£100 and ¬£30,000.
  • If your purchase is faulty and the seller offers you a replacement or compensation you can not make a claim.
  • It does not cover payments made to a party that is not the company providing the service or product. (such as comparison sites)

Cancellation rights

Under the Consumer Credit Act, if you sign a credit agreement you have the right to cancel the agreement, these cancellation rights must be included in the credit agreement and sent to you within seven days. 

You then have a 14 day cooling off period in which you can cancel your agreement. For credit cards the 14 day cooling off period starts the day you are told of your credit limit.

Advertising

Strict advertising rules apply to unsecured credit including credit cards, loans and hire-purchase agreements. This includes that if an interest rate is included in the advertising then the representative APR must also be shown.

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