If you have a credit card, there are certain rights around interest rates, credit limits and protection that it’s important to be aware of.
Here are six of the main rights you have as a credit card holder.
1. Right to repay
Your repayments will always be put against the highest rate debt first. If you open a new account, your minimum payment will always cover at least interest, fees and charges, plus 1% of the amount you owe.
2. Right to control your credit limit
You can choose not to receive credit limit increases in future and can reduce your credit limit at any time. You’ll also have better automated payment options. You’ll be able to reject higher credit limits and make payments online.
You can request a higher credit limit if you want to, and it will be up to your card provider to decide whether or not to offer you one. You’re more likely to be offered a higher credit limit if you’ve held your credit card for several months and have never missed a repayment, as you’ll have proved to your card provider that you can manage your debts responsibly.
3. Right to reject
If your credit card company increases your interest rate it must give you at least 30 days’ notice of this change.
You will be given 60 days to reject the increase if you want to, cancel the card, and pay off what you owe at your current interest rate.
4. Right to information and help
If you’re getting behind with your payments or making minimum payments, you should be given guidance by your credit card provider on the consequences of paying back too little. Credit card companies must help borrowers who have been in persistent debt for 36 months to repay their debt more quickly.
5. Right to compare
You’ll be sent a credit card statement once a year that gives you the information you need to be able to compare the deal you’re on with other credit cards on the market. It’s not that difficult to compare deals, but what can cause problems is if credit card providers use ‘risk based pricing’ – which means they charge a higher interest rate for consumers they assess as being a higher risk. If that’s the case, you may find that your credit rating suffers as, in some cases, just the act of getting a quote for a credit card can make it look like you’ve been taking out extra credit.
6. Right to protection
If you’re buying an item costing £100 or more using a credit card and something goes wrong with your purchase, then under Section 75 of the Consumer Credit Act, your card provider is jointly liable with the online store and may agree to refund you if the company you’ve bought the item from won’t.
If you paid with a debit card rather than a credit card, or your purchase cost less than £100, you may still be able to claim your money back using ‘chargeback’ which enables your card issuer to provide you with a refund. This process is not as clear cut as the use of Section 75 in the Consumer Credit Act, so there are no guarantees that your issuer will be able to recover your money – but it could still be worth a try if all else fails.