How does a credit card actually work?

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LAAQ
LAAQ Posts: 6 Forumite
in Credit cards
In light of what's happened with Thomas Cook, I've heard that it's safer to buy with a credit card.

What I don't understand is, say I have a Barclays credit card and I pay for a holiday which costs £200 in October, and at the end of October I pay Barclays the full £200. So when it's actually my holiday, say in February the following year... If my holiday company goes bust, can I claim my money back with Barclays? Because I don't owe them anything?

Also, if you ALWAYS pay your credit card in full at the end of each month, then do you always pay zero interest? Or is it only zero interest in the introductory period?

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  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
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    Yes you’ll be able to claim it back.

    Yes if you pay in full there no interest.
  • eco_warrior
    eco_warrior Posts: 563 Forumite
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    LAAQ wrote: »
    In light of what's happened with Thomas Cook, I've heard that it's safer to buy with a credit card?

    It’s not safer as such but credit cards offer section 75 protection which isn’t available on debit cards.

    Both offer chargeback which covers not receiving the service you’ve paid for, like with the Thomas Cook situation.

    I’ve dealt with around 500 Thomas Cook claims so far and the section 75 refunds/claims are haven’t reached £100 yet. Chargebacks are over half a million pounds.
  • PRAISETHESUN
    PRAISETHESUN Posts: 3,722 Forumite
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    It'd be worth reading up on section 75 protection. It basically makes the card issuer jointly liable with the seller so if you are unable to reclaim money from the seller then you can go after the bank instead. See here: https://www.moneysavingexpert.com/shopping/section75-protect-your-purchases/. Doesn't matter if the credit balance has been repaid or not, as long as you initially paid with the seller directly with your credit card.

    As for interest, you need to read your credit agreement. It's pretty standard for credit cards to have no interest if you pay the statemented balance by the due date. This is regardless of any promo rates, which are usually an extension of this standard interest-free period.
  • MallyGirl
    MallyGirl Posts: 6,623 Senior Ambassador
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    PRAISETHESUN wrote: »
    As for interest, you need to read your credit agreement. It's pretty standard for credit cards to have no interest if you pay the statemented balance by the due date. This is regardless of any promo rates, which are usually an extension of this standard interest-free period.

    Unless you make cash withdrawals or perform 'cash advance' classified transactions such as gambling - these incur interest charges from the transaction date regardless of whether you pay in full.
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  • molerat
    molerat Posts: 31,856 Forumite
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    LAAQ wrote: »
    Also, if you ALWAYS pay your credit card in full at the end of each month, then do you always pay zero interest?
    99% of the time yes but there are one or two out there that do not have an interest free period, luckily they are quite rare.
  • boo_star
    boo_star Posts: 3,202 Forumite
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    molerat wrote: »
    99% of the time yes but there are one or two out there that do not have an interest free period, luckily they are quite rare.

    I think Lloyds has (had?) one that offered no interest free period.
  • crumpetman
    crumpetman Posts: 339 Forumite
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    I think these forums should be renamed "Ask Jeeves"

    It must be easier to google questions like "how do credit cards work" then post a question on here and read through umpteen replies.
  • jimbo26
    jimbo26 Posts: 954 Forumite
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    https://www.moneysavingexpert.com/credit-cards/how-do-credit-cards-work/
  • TheShape
    TheShape Posts: 1,779 Forumite
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    molerat wrote: »
    99% of the time yes but there are one or two out there that do not have an interest free period, luckily they are quite rare.

    Here's one of the few:

    TSB Advance Mastercard

    https://www.tsb.co.uk/credit-cards/purchases/advance-credit-card/
  • NoodleDoodleMan
    NoodleDoodleMan Posts: 3,360 Forumite
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    Remember a credit card is essentially a short term loan - payback the total sum in full within the timescale after the monthly statement is published and no interest is applicable - except those rare cards mentioned above.

    The best case timescale scenario is 56 days (?) from date of purchase until date of settlement.
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