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Holiday protected by credit card?

Borrowing | Credit Card Helpful? 6

Asked by Jewson, submitted 01 February 2010.

Open Quote Is it right that if I pay the deposit for a holiday with a Visa credit card, but the balance by other means, I still have payment protection for the whole amount for the holiday should the provider go bust?End Quote

Answered by Justin on 02 February 2010

In general, yes, but it’s not always straightforward.

When you pay for a single item costing between £100 and £30,000 using a credit card then you’re protected under section 75 of the 1974 Consumer Credit Act – which says the credit card company is equally liable with the retailer, even if only part of the purchase price was made on your card.

So you could, for example, pay a £50 deposit for a £500 holiday on your credit card and the rest in cash and you’ll still be covered for the full £500 via your credit card provider.

However, if you book a flight or package holiday through a travel agent who simply sells you a ticket/package from an airline or tour operator directly, you won’t normally be protected by section 75. This is because the travel agent is deemed to have only supplied you with the tickets and not the flight or package itself – silly, but that’s the way it is.

If the travel agent builds a package for you then you should be protected by section 75, although whether travel/accommodation/car hire are classed as single items re: the £100 minimum depends on whether they’re billed separately or as a single ‘package’ price.

It’s worth remembering that provided you book a holiday through an Association of British Travel Agents (ABTA) member then you should be covered by their protection scheme in any case. If you’re on holiday and the tour operator or airline goes bust the agent will ensure your holiday continues as originally planned and get you home afterwards.

Also, flights protected by Air Travel Organisers’ Licensing (ATOL) cover you against airlines going bust. While most tour operator flights are ATOL protected, scheduled flights booked directly with an airline, and often travel agents, aren’t.

Back to section 75, the cost of a single item excludes any credit card fees, delivery and other similar charges. And where low cost airline flights are purchased on a one-way basis, each flight will be treated as a separate item whereas a return flight is one item.

Finally, remember section 75 only applies to credit cards. Debit cards, cheques and card cheques are not covered.

Bottom line, it’s usually worth paying holiday deposits by credit card if it appears you’ll be protected by section 75. Also check whether your holiday/flight is ABTA and/or ATOL protected. Nevertheless, it’s sensible to buy travel insurance in any case, but shop around for a good deal - the policies sold by travel agencies are often overpriced.

Please note this answer does not constitute a recommendation or financial advice and should not be relied upon when making specific investment or other financial decisions. You should always undertake your own research into whether a product or service is appropriate for your needs and, if necessary, use a qualified professional adviser.

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