Why you should never be without a credit card

I previously wrote about some credit card debt I am poised to pay off (since the 0% interest period is coming to an end). Upon doing so, I was planning to do without a credit card for a while- at least until Apple Card launches here in the UK (Daily Cash representing 2% cashback on all purchases sounds amazing). But a colleague recently reminded me of an important reason you should always have a credit card at your disposal. In order to explain, allow me to retell his story…

My colleague had ordered a very expensive coffee table from an online retailer. Upon receiving his new item of furniture, he discovered it was far smaller than what he had been expecting. So he went back and checked the product page. Sure enough, the dimensions given were wrong versus the size table he had received. He contacted the retailer’s customer support team to enquire about a refund but didn’t get very far. At this point, he decided to issue a chargeback.

What is a chargeback?

Chargebacks can be issued via your bank or credit card issuer in circumstances whereby you are either didn’t receive the item you paid for, or you’re not satisfied that the item you purchased matches the product description, as given by the vendor. Chargebacks are a form of buyer protection that can result in customers receiving a full refund for their purchase. Vendors have 90 days to appeal a chargeback but providing you’ve supplied evidence to support your case, the vendor is unlikely to win any appeal.

Credit vs. debit cards

Chargebacks are not exclusive to credit cards, they can be issued for debit card purchases too. However, if your purchase was over £100, then your credit card issuer automatically becomes liable for any issue you experienced with your product. This comes under Section 75 of the Consumer Credit Act. Therefore, it is in the interest of your credit card issuer to side with you as the consumer in any case that is not clear cut.

My next credit card

So I’m thinking about getting the American Express Preferred Rewards Gold Card since it’s free for the first year and comes with a host of extras including:

  • 2x free airport lounge passes
  • Up to 10,000 free membership points

What’s more, signing up for one via Quidco currently earns you £10 cashback! The only downside is, having previously owned an Amex, I know a lot of places don’t accept American Express cards due to the more expensive processing fees.

Wait to apply If you’re applying for a mortgage

Please bear in mind that applying for a credit card will leave a mark on your credit rating. Since this can impact your chances of being approved for a mortgage, if you plan to apply for a mortgage in the next three months then hold off applying for a credit card.

Calculate the interest on your credit card

Calculating the interest you are due to pay on your credit card is extremely important when it comes to managing your finance and reducing debt.
Below is a useful tool to calculate what interest you will pay on your credit card balance in the event that you don’t pay off the balance in full each month. Head over to Sofi at: https://www.sofi.com/credit-card-interest-calculator