Surcharges when paying with a CC

abacus_2

I am just about the pay the balance of a holiday I have booked. The tour operator adds a 2% surcharge when paying with a CC.

Obviously, I have an amount of protection by paying this way if the comapny goes bust; But is it worth 2%?

Any opinions?

westernpromise

I am just about the pay the balance of a holiday I have booked. The tour operator adds a 2% surcharge when paying with a CC.

Obviously, I have an amount of protection by paying this way if the comapny goes bust; But is it worth 2%?

Any opinions?

From a cash point of view, no. If you pay with a credit card, you can hold onto your cash for about 2 months longer than if you paid by cheque. In 2 months you will make about 0.9% interest gross, or around 0.6% net if you're a basic rate taxpayer.

If you use a cashback card to pay, then you will get probably 0.5% of that 2% surcharge back in due course.

So the net result is that you'll lose about 0.6% (i.e. 1.5 minus 0.9) of the holiday price if you pay with a cashback credit card.

You do appreciate, do you, that you needn't pay for the whole holiday with a card to get protection? Even if you only pay the deposit by card, then the card company is liable for the whole lot if the travel company goes bust.

That's what I'd do. Pay the 2% on the deposit and write a cheque for the rest.

Rafter

Are you sure about that Western Promise?

Seems incredible that the card company would be liable for any more than the deposit.

I've never paid the 2% surcharge on the basis that I always book with an ABTA/ATOL bonded supplier and have rock solid travel insurance too. Doesn't seem much point paying twice.

Be careful about relying on your credit card to cover you for booking direct with overseas companies. Following the recent high court ruling UK card companies are not liable under the consumer credit act for purchases made overseas.

R.

johnllew

Are you sure about that Western Promise?

Seems incredible that the card company would be liable for any more than the deposit.

Yes, WP is quite correct. As Martin says in his "Consumer Rights" article:

Pay on a credit card.  Pay for goods worth over £100 even partially on a credit card, then the credit card company is equally liable with the retailer and this gives you a second bite at the complaining cherry....This does not work with debit cards.  (this stems from Section 75 of the Consumer Credit Act 1974)

Rafter

These two guidance sheets from Milton Keynes Trading standards might be useful reference:

http://www.tradingstandards.gov.uk/milton-keynes/C07%20Holidays.pdf

http://www.tradingstandards.gov.uk/milton-keynes/C03%20Equal%20Liability.pdf

And this one gives some useful advice on the limits of Section 75. Main learning seems to be make sure you are booking direct and not through an agent unless you are buying a 'package'.

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

R.