Credit Card protection, an urban myth?

[clear prop!!!]

Have to say that I’m a bit confused by all this credit card talk here on this forum.

If you guys have got credit limits on your cards of up to 50K then I am well impressed and must be doing something wrong to only have a limit of £3k on mine!!

As I understand things the card companies obligations under the consumer credit act only cover you if indeed you have taken out ‘credit’ and for the balance outstanding on your card. Therefore you couldn’t just pay in £30k to your credit card account, pay your FTO, then, claim against your credit card if they go bust. Why, because in effect you have not taken out any credit and your balance with your credit card co is zero, therefore… no comeback.

Has anyone ever actually paid the sort of sums of money talked about on the various threads here by credit card?? I can understand a few grand, but is paying for an integrated course on a credit card really an option??...and just how to you get that sort of credit??

Remember debit cards such as Amex etc give you no cover whatsoeveras there is no 'credit' element.

Have I got this wrong?
:confused:

[QNH 1013]

I don't know if it is possible to get a credit limit of £50k on a credit card but it sounds as if it would be difficult. However, it is easy to get additional credit cards once you have one. There are so many offers for cards around at present. I have eight (I think) with a credit limits varying from (from memory) £3800 to £12500, total over £60k. I didn't obtain all these to get a large total, but rather to take advantage of the very low interest rates on balance transfers and you need extra cards because they are only at the low rate for 6 months. Using this method I have paid less than 2 % interest on the cost of my IR. It cost me a lot but I've got the outstanding balance down to less than £3k now! (interest last month less than £5).
However, beware of the pitfalls, you have to read the fine print VERY carefully. I could write a leaflet on how I did it - I learnt several mistakes the hard way!

[Wee Weasley Welshman]

The obvious method is to get a dozen cards with a £4k limit. Not hard to do.

If you want to pay all up front that is.

Most schools with split the fees into chunks.

Good luck,

WWW

[Sensible]

Just check out the exchange rates with the cards, the £-$ rate on some of the cards is pretty poor!

[singaporegirl]

CP,

You don't have to pay the whole amount on your credit card for something to be covered. As long as whatever you're buying comes to £100 or more, you can pay a deposit (eg £50) by credit, and the remaining £49,950 by cash(!) and you'll still be covered by the Consumer Credit Act. :D

[Polar_stereographic]

singaporegirl,

Well, I never knew that. Just goes to show, that every day is a school day!!

PS

[clear prop!!!]

Singaporegirl

I don’t know where on earth you got that from!!!

I’m not saying you are wrong, but my reading of things is that the CSA only covers you for those amounts which you have taken out on credit, which, I have to say makes sense.

Whilst I appreciate the words of wisdom given to me here, I must add that I am not in the position to need to raise the cash through credit cards etc as I have gone through the mill, ..have the ’T’ shirt ,..the overdraft and the not very impressive plastic folder with CPL on it.
The credit card is now only needed to live on ..due to an FI's Winter pay!!

The point of the thread was to question threads where posts like ‘use your credit card and ‘go for it’’ and ‘pay by credit card and you are OK’.

I have to say that I suspect that most of these comments come from those who have no idea of the facts of life and what is entailed in entering into such huge levels of debt, in the total misunderstanding that (A).. you can get such huge levels of unsecured debt, and (B), you are totally covered against bad judgement.

The best idea has got to be something, which I believe is called an ESCRO account.
This is an account designed for such circumstances where the buyer does not have full confidence in the seller’s ability to deliver, and the seller does not have full confidence the buyer’s ability to pay when the services are delivered. The account requires both parties to sign before monies are released to the seller. If the seller were to go bust, the buyer would get his money back.

I know that Cabair were ‘kind of’ OK about this a few years ago and perhaps it is the way ahead in the current climate.

Frankly, the idea of paying on half a dozen credit cards is ‘tacky’ if not expensive!

The long and short of things is to listen the advice given over and over and over again…pay nothing but the hour you are about to fly up front! I cant help but believe that most FTO's will understand your concerns right now!!

[George Semel]

Boy you guys are nuts, when you use those checkques, its considered a cash advance and the intrest can be quite steep. God its the last way to finance a certificate or rating. I did all of mine more that 28 years ago, and well I just paid as I went. Kept small amounts on account and settled at the end of the month. For you flight instructors, why not drive limo's on the side? Hell I do and its great, I make more on a friday night than what I use to do for a good week and a half flight Instructing. Its a great second job. Do it for a year before you start training, its slow now and its going to be for a few years. This way when things break open again and they will, you are not floating a mountain of high intrest debt. I had the credit cards and I got rid of them all a couple of years ago. Best move I ever made. I know training is not cheap, it never was. Most of the jobs out here don't pay very well or is seasonal at best. Its a lot easier to work as a pilot in most of the jobs if you are not servicing a lot of loans. I drive a 12 year old car. I don't know how it is in Britain or Europe, but here in the States its going to be slim pickins for awhile. And what jobs there will be will not pay much. This will be the fifth aviation recession I have seen in my flying career. Some of you never seen bad times. I do my best during these periods. Right now I am debating a move for a job flying an Twin Star. I never flown one and I'm having a hard time getting off the dime. Oh I fly both airplanes and helcopters by the way.

[ 21 November 2001: Message edited by: George Semel ]

[singaporegirl]

CP

The Consumer Credit Act 1974, Part VI, Section 75, states that:

(1) If the debtor under a debtor-creditor-supplier agreement falling within section 12(b) or (c) has, in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the to the debtor.
(2) Subject to any agreement between them, the creditor shall be entitled to be indemnified by the supplier for loss suffered by the creditor in satisfying his liability under subsection (1), including costs reasonably incurred by him in defending proceedings instituted by the debtor.
(3) Subsection (1) does not apply to a claim –
(a) under a non-commercial agreement, or
(b) so far as the claim relates to any single item to which the supplier has attached a cash price not exceeding £100 or more than £30,000.

Note that the Act refers to a transaction financed by the agreement, rather than a transaction financed wholly by the agreement; this is interpreted as meaning that as long as you pay part of the price by credit card (and the rest by cheque, say) you can recover the whole amount from the credit card company as long as the total price is more than £100 or less than £30,000. So I was wrong to say you'd be covered for £49k in my original posting, as it's more than £30k, but I stand by the rest.

I'm not aware of any case law on this, presumably because everybody within the industry follows this interpretation...

As for escrow accounts, in theory they are fine as long as the trustees are reliable. There have been cases, for example, of tour operators who claimed that their clients' money was protected by an escrow account, only for them to go bust and for trading standards to discover that the account contained a few pounds – hardly enough to get stranded travellers home!

[carbheatcold]

singaporegirl,

My understanding of the rules was that to be covered by the Consumer Credit Act as stated, you had to spend £100 or more on the credit card to be covered and from personal experience that does not guarantee a bank is going to roll over backwards and just pay up in the event of a claim without you putting up a fight. I cannot see how by part paying cash you have entered a credit agreement for the cash portion.
IMHO if someone is thinking about doing it this way take professional advice from CAB or Trading Standards first.

[big.al]

singapore girl et al....

Can anyone confirm whether or not credit card protection (such as it is, obviously there is still some debate, which I won't enter into because IMHO I have no idea!!) is valid for purchases of goods / services outside the UK, for a UK credit card? I intend to do my PPL in the USA - will my UK credit card give me some protection against the FTO going bust during my three week intensive course?

Thanks.
Big.Al

[Blindside]

big.al

Why are you going to a FTO that doesn't allow you to pay-as-you-go? Some do, so why not take advantage of this?

The possibility of the FTO going bust isn't the only risk to consider, and paying in installments covers you as much as possible.

regards

[singaporegirl]

carbheatcold

The Office of Fair Trading, which oversees trading standards departments, confirms the view in my previous posting:

"Section 75 liability

Section 75 provides that the credit grantor will be jointly and severally liable with the supplier for breach of contract or misrepresentation if all of the following conditions are satisfied:

<sum> The cash price of the item supplied is over £100 but not more than £30,000 (including VAT).

The section requires that an item should be a ‘single item’, which will depend upon the facts of the case. The courts would be likely to look at how the goods were marketed. A set of golf clubs sold as such for £200 would be covered, even though each individual club is worth less than £100; whereas airline tickets can be viewed as separate contractual items, so that 4 tickets costing £50 each would not enjoy the protection of s.75, despite the fact that the total value of the transaction is £200. However, the case might be different if the tickets were marketed as a package, e.g. as a family holiday.

Where a deposit of £100 or less has been paid on credit for goods or services with a cash price of over £100, then s.75 will still apply. This is because a ‘transaction financed by the agreement’ for the purposes of s.75 (1) is to be interpreted as one financed wholly or partly by the credit agreement. The liability of the card-issuer is not limited to the amount paid by credit card or indeed the cash price of the goods. Where a consumer has made a purchase whose cash price is within the monetary limits (even though only a small deposit may have been paid by card) s/he will be able to bring a claim against the card-issuer for all reasonably foreseeable losses flowing from any misrepresentation or breach of contract by the supplier."

For the full article, see http://www.oft.gov.uk/html/consume/credit.htm and click on 'Rights when purchases go wrong'.

big.al
The same article also discusses your rights when using a credit card to buy goods or services abroad. The OFT takes the view that you should be covered in the same way, but concedes that "any claim for breach of contract or misrepresentation is likely to be governed by the law of the country in which the goods or services were purchased, and not by UK law, and so it may be more difficult for consumers to establish liability".

[carbheatcold]

singaporegirl,

Good advice on your last post. I copied this from the search facility of the link you placed:

You may have some extra protection if you make payment using a credit card. If you have a claim against the seller for breach of contract or misrepresentation - for example if goods were not supplied, were not as described or were faulty - you may also have a claim against your credit card issuer. This could also be useful if the seller goes out of business.

This applies to goods or services costing more than £100 for one item (but less than £30,000), even if you have only used your card to pay a deposit.

Your right to make a claim against the credit card issuer in these circumstances comes under section 75 of the Consumer Credit Act 1974. Further information on section 75 is available on this web site . Further advice can be obtained from your local trading standards department or Citizen's Advice Bureau.

Remember, you do not have the same protection if you pay by a debit or charge card.


Having had to fight a bank to pay up for its joint liability when a health club I joined went bust. I can only imagine the fight that would be necessary to get back the cash portion as well BUT in view of all the recent problems with Training schools I would guess that it is essential to pay something by the credit card.

[PowerRanger]

Sorry boys and girls but I'm afraid you're all talking out of your jet pipes!!

The Consumer Credit Act 1974 only covers those transactions specifically regulated by the Act. The lower limit is £100 as someone correctly posted earlier but the upper limit (originally set at £15,000 in 1974) was revised to only £25,000 a couple of years back.

The Act drafters figured anyone borrowing over that sum ought to be astute enough to manage their own affairs without the need for legislative protection!!

I tend to agree with them.

Better find another tree to bark up people. This one wont fall.

:rolleyes:

[Naples Air Center, Inc.]

big.al,

It is my understanding that Credit Card Purchases are covered as long as you use your card. I have seen posted in this forum threads stating that they thought they did not cover oversees purchases.

I suggest that you check with your credit card company, since I suspect that each card company will have differing policies regarding oversees purchases.

The best solution would be to ask your credit card company what types of purchases are covered. If oversees flight training is not covered with your current card, ask if a Gold or Platinum Card will cover the training.

Hope this Helps,

Capt. Richard J. Gentil, Pres.
Naples Air Center, Inc.

(Typos, teach me to type and run!)

[ 22 November 2001: Message edited by: Naples Air Center, Inc. ]

[singaporegirl]

PowerRanger,

£25k refers to the amount of credit and not the cash price of the item, which is limited to £30k. Quoting from the OFT again:

"A regulated agreement is one where credit of not more than £25,000 is advanced to an individual (a term that includes sole traders, partnerships and unincorporated bodies as well as private individuals) and which is not specifically exempt from regulation. The £25,000 limit relates to the amount of credit and not the cash price of the item. In addition, the credit grantor must be in the business of granting credit and the credit agreement must be made in the course of that business."

Most of the discussion on this thread has been about whether using credit cards with their relatively small credit limits still offers protection if they are used as part payment. Having said that, if anyone out there has a credit limit on their credit card of more than £25k, I'm free and single! :D

Capt Gentil,
In the UK most gold cards are not covered by the Consumer Credit Act, so they would definitely not increase your level of protection – quite the opposite. It may be different in the US.

[rolling circle]

All being well, this discussion will have been superfluous. A reliable contact within GAMTA informs me that the CAA are currently formulating plans to make it a condition of approval that customers advanced payments are ring-fenced.

If the FTO cannot prove, to SRG Finance Department's satisfaction, that their customers' money is secure in the event of the company going under, they will not get approval.

Of course, the FTO lobby is strong and SRG, historically, is weak so we will just have to wait and see.

[126.825]

power ranger

can you just use 2 cards from different companies then? 2 x £25,000 sounds quite nice.

:) :D :)