Paying for a holiday on credit card – Are you protected?

Thinking of booking a holiday? Using your credit card to pay could offer extra protection if things don’t go to plan.

No one expects their dream trip to go wrong, but sometimes the unexpected happens - flights get cancelled, hotels don’t match the pictures, or travel companies go bust. That’s where paying with a credit card can help.

Thanks to Section 75 of the Consumer Credit Act, you could get a refund if something isn’t as it should be, giving you extra peace of mind when booking your getaway.

What protection does a credit card give?

The protection provided by credit cards comes under Section 75 of the Consumer Credit Act. For a purchase to qualify it must be:

a) paid for using your credit card, and 
b) above £100 and below £30,000.

So, what does Section 75 actually cover? There are four broad areas:

1. If an item you’ve purchased is faulty or damaged, under Section 75, you’d be entitled to either a refund or a replacement.
2. If something you’ve bought arrives and isn’t the same as the description it was sold under.
3. You’ve been charged for a product or service but never received it.
4. The retailer or trader you purchased the product or service from goes out of business before you took receipt of what you paid for.

In the world of holidays, this could be the airline your flight’s with going bust. Or, the hotel resort you’re booked with being advertised as 5-star, but in reality, being a two. These are just a couple of many possible scenarios where Section 75 could assist you.

It’s worth noting that Section 75 also stands if your credit card was just used as a partial payment. This means that if you used a credit card to pay for the holiday deposit, and then another means of payment for the remainder of the cost, the full purchase of the holiday would still be covered.

Don’t overspend on your credit card

When you’re spending on your plastic, it can be easy to get carried away - especially when you’re off on holiday. A flight here, hotel stay there, and a nice meal out to round off a fun day in the sun. It all adds up.

But, don’t forget you’ll need to pay it all back as soon as you can. If you don’t, you’ll be charged interest on your outstanding balance which could soon mount up into something pretty steep. After all, the last thing you want is your summer holiday racking up debt long after you’ve arrived home.

It’s also important to remember that most credit cards will charge a foreign currency fee for using your card abroad, so be mindful of the actual cost of each purchase.

Can I claim on my credit card if I cancel my holiday?

This depends entirely on the reason you’re cancelling.

If your travel operator changes the T&Cs of either your travel dates, accommodation, or flights, you can get a full refund. You’re also entitled to complete compensation if the cost of your holiday rises after you’ve booked - and you’re asked to pay more.

Outside of these exceptions, you don’t have any legal rights to cancel and claim, and instead, you’re relying totally on the terms and discretion of your provider(s).

This is why it is also important to look into travel insurance, which could help cover other areas, such as cancellations due to illness or emergencies.

Flights

If you need to cancel your flight(s), some providers might give you a partial refund, allow you to transfer your flights, or let you claim any airport tax paid. Others, however, and particularly budget airlines, could refuse you anything back.

Accommodation

This will also vary from place-to-place. Some might let you move your dates around or give you a full or partial refund, others may not. It’s a good idea to check the terms of any potential booking before committing.

Does my credit card cover flight cancellation?

In most cases, yes — if your flight cost more than £100 and you paid by credit card, you should be covered under Section 75 of the Consumer Credit Act. This means you can claim a refund if the airline goes bust or cancels your flight without offering an alternative.

However, there’s an exception. If you booked your flight through a third party, such as a travel agent or booking site, you might not be able to claim. This is because the agent’s responsibility is to provide your tickets — not the flight itself.

To be on the safe side, check the cancellation policy of both the travel agent and the airline before booking. That way, you’ll know where you stand if your plans change.

Should I pay for my holiday with a debit card?

Debit cards do have some protection, but it’s not the same as Section 75. You could make a claim under what’s called the Chargeback scheme with your debit card if:

• Purchase doesn’t arrive
• Purchase arrives damaged
• The goods aren’t what they were advertised to be
• The merchant stops trading.

There are a few important things to know about the Chargeback scheme:

• Unlike Section 75, it doesn’t come with a spending threshold, so you can claim for any amount of money.
• It applies to purchases made on your credit card too.
• There are no legal obligations around Chargeback. Basically, this means each provider will have their own rules; so make sure you’re familiar with what your bank's are.