Martin Lewis has explained a little-known benefit of having a credit card: the "Section 75" rule, which provides powerful protection for purchases costing between £100 and £30,000.
The personal finance expert said in a new video that this law applies to credit cards from providers including Lloyds, Halifax, Bank of Scotland, NatWest, HSBC, Santander, and Nationwide. Under Section 75 of the Consumer Credit Act, the credit card company is jointly liable with the retailer if something goes wrong.
How part-payment works
Lewis emphasised that customers do not need to pay the full amount on their credit card. He stated: "There's a hugely powerful piece of consumer rights voodoo and it is called section 75. It's a law that says if you pay or even part pay for something on a credit card and the item costs between £100 and £30,000 then the credit card company is jointly liable with the retailer."
He explained that even paying just a penny on the credit card gives the same protection for the entire purchase. "And yes, that does mean if you pay for just a penny on the credit card and the rest another way, the credit card company is still liable for the whole amount even if it was 10 grand. And I have had people who have got their money back using just that technique."
Joint liability means customers can approach the credit card company if the item is faulty, if the retailer goes bust, or if the purchase was made abroad. Lewis advised paying off the balance in full monthly to avoid interest, and noted there are "a few technical holes" but it is still better to use the rule.
Debit card and pay-by-bank warnings
Consumer group Which? has warned that debit cards do not offer the same Section 75 protection. However, debit card users may be able to use the chargeback scheme at participating retailers. Money editor Jenny Ross urged consumers to think carefully before using pay-by-bank for events or substantial purchases, as it lacks the rigorous protections of card payments.
"Innovations like pay by bank present opportunities for businesses and consumers alike, but they're not without risk, particularly as they lack the rigorous purchase protections you get when paying by card," Ross said.
While pay-by-bank users retain basic rights under the Consumer Rights Act, Which? noted these rights are not always straightforward to enforce, and customers may have to pursue claims through small claims court. If a business goes bust, recovering money paid by bank transfer is harder than with a credit card covered by Section 75.
Industry and ombudsman perspective
A spokesperson for UK Finance said: "There are a range of options for making payments online which provides customers with choice as to how they wish to pay. Different payment methods do come with different levels of protection and it's worth being aware of these when shopping online, particularly when making higher value purchases."
The Financial Ombudsman Service receives thousands of complaints annually from consumers whose Section 75 claims have been denied by their credit provider.
