Credit card for large purchases. Insurance.

tom101

Hello,

I've never had a credit card, I just use my debit card. After XL's collapse I heard news reports that those who bought their flights with credit cards would be able to reclaim the cost of the flights, whereas those who bought with debit cards would not. This got me thinking that I should get myself a credit card for large purchases, but what's the deal with this insurance thing? And which card should I get? I'll be paying anything off in full every month.

Thanks for your help.

Tom

jd87

The first important thing is that you shouldn't be fooled into confusing this insurance thing with payment protection insurance. Payment protection insurance is something they'll try to sell you which covers you if you lose your job and can't pay the credit card back.

The Consumer protection act section 75 insurance is what you are talking about. ALL credit cards provide it, so just pick whatever card you prefer. Probably best to get the lowest purchase rate you can, just in case you don't pay it off in full each month. If you have good credit you might be able to get a card that offers cashback or reward points. Just go for the best one for you.

benf90

The 'insurance' which you refer to is section 75 of the Consumer Credit Act, which all card companies must adhere to.

For more details of this have a read of this guide from the Financial Ombudsman:

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/31/creditcards-31.htm

If you're going to be paying the full balance each month (thereby avoiding interest) then a card with some sort of benefit such as cash back is a good idea. However, if you've never had a credit card you may not get one of these cards straight away.

It all depends on whether you've had other types of credit before, such as loans or a mobile phone contract. It'll be a good idea to have a read through some of the guides on this site to get an idea of the different types of cards out there etc.

http://www.moneysavingexpert.com/cards/