Consumer rights: Credit cards are the route to a soft landing

You can't rely on travel cover if an airline goes bust, leaving you stranded. But if you paid by plastic, you may have more financial protection than you think


I was a Zoom customer coming back from Canada. We were on the tarmac waiting to take off when the plug was pulled on the budget airline. We got the tickets with a credit card so the cancelled flight is covered (about £1,000), but I'm now trying to chase up the cost of the new flights we had to book (a mind-boggling £5,000).

I had travel insurance – it's part of a current account package with HSBC that costs £12.95 a month. But the bank didn't want to know when I asked if I could claim on the policy. Instead, it referred me to Norwich Union, which underwrote the insurance. NU says I'm not covered.

PD, Brighton



This is likely to be a widespread problem as bankruptcies in the travel industry become common and travellers find themselves stranded in far-flung corners of the globe. Very few travel insurance policies cover the bankruptcy of airlines and the insurance offered through HSBC's Plus package, underwritten by NU, is no exception.

Some policies (a little late, you might argue) are now advertising that they include international passenger protection, which covers you for bankruptcies. It is another one of those insurance wrinkles where you end up paying extra for something you would have thought was included as a matter of course.

However, there is hope, according to Peter McCarthy, a senior lawyer at Which? Legal Service, who says you should be able to get more money from your credit card company than the £1,000. "If you have paid on a card, the bank is jointly liable for any breach of contract. Failure to provide the flight is clearly a breach of contract.

"Any compensation should put you in the position you would have been in had the contract not been breached. Your loss is not the £1,000 you paid for your flight, but the £5,000 it cost to get back home, so the credit card company is liable for the full amount, not just the cost of the original flights.

Mr McCarthy continues: "If you have no luck with the card provider on this issue, you can take it to the financial ombudsman. After that, your recourse is the small claims court."

The key message for anyone booking a holiday is to ensure they pay on a credit card. Ultimately, you may find it offers more protection if disaster hits than some travel insurance policies.



***

I've just been made god-father to my friend's daughter. I want to set up some kind of investment plan for her.

Her parents are financially astute and will almost certainly have set up school fees plans and that sort of thing, so it might be good to do something different. Should I go for "children-friendly" products or are they a waste of time?

RG, Northampton



***

As her parents are focused on getting her through school and university, you can provide the racier stuff that she can save or squander when she hits 18. Danny Cox, from independent financial adviser Hargreaves Lansdown, says the main questions to ask are when you want your god-daughter to benefit, and how much risk you want to take.

He continues: "If you don't like the idea of stock markets, National Savings premium bonds are a fun way of investing with the chance of a prize. If you have average luck, the return on your investment will be 3.4 per cent tax-free, but it could be higher or lower. The alternative cash- based solutions, such as the children's accounts and children's bonus bonds, will provide less risk but also less potential for returns.

"If you are happy for her to receive her investment at the age of 18, and feel that going into the stock markets would be beneficial, you could invest in a unit trust, with your goddaughter as an account designate. This creates a simple "bare trust" under which she is absolutely entitled to the proceeds at 18.

"Unit trusts can invest in cash, fixed interest, property or equities – and over the longer term, shares tend to provide the best returns," adds Mr Cox. "As long as you are happy with the risk, equity income works well in this situation as the sector tends to be less volatile than other markets.

"My favourites are Invesco Perpetual Income and PSigma Income. You can save regularly from £50 per month or as a lump sum of £500, or a combination of the two."



***

With rising household bills, my pension no longer meets my outgoings every month. I had always hoped I'd be able to do a bit more in retirement and am keen to look at ways to top up my income. Equity release seems a good idea but I have read some horror stories.

SM, Hazlemere



***

Equity release has taken a pounding in the media. And until quite recently, that poor image was largely deserved. These schemes – under which homeowners sell part of their property to unlock income – were unregulated and attracted a number of sharks.

However, equity release has now been brought under the remit of City regulator the Financial Services Authority and also has its own trade body, Safe Home Income Plans (Ship). It is altogether more respectable and well managed.

But using equity release is still not a decision to be taken lightly. Philip Spiers, author of Care Options in Retirement, an advice book from consumer group Which?, has this to say: "Equity release schemes are much fairer today than ever before, having competitive interest rates and 'no negative equity' guarantees. But you should always consider the alternatives, such as borrowing from family, using existing savings, checking for any benefit or grant entitlement, taking in a lodger or moving to a smaller property.

"If equity release really is the only solution, only borrow what you need. There are schemes that let you draw down money as you require it, rather than taking out a large sum at the beginning and paying interest on it.

"You should also see if there are any charges for early repayment; some schemes have none while others can be very high."

Always seek independent financial advice from someone who specialises in equity release. Do not be tempted to buy from cold callers or from door-to-door salesmen.

Life and Style
Powdered colors are displayed for sale at a market ahead of the Holi festival in Bhopal, India
techHere's what you need to know about the riotous occasion
Arts and Entertainment
Larry David and Rosie Perez in ‘Fish in the Dark’
theatreReview: Had Fish in the Dark been penned by a civilian it would have barely got a reading, let alone £10m advance sales
News
Details of the self-cleaning coating were published last night in the journal Science
science
News
Approved Food sell products past their sell-by dates at discounted prices
i100
News
Life-changing: Simone de Beauvoir in 1947, two years before she wrote 'The Second Sex', credited as the starting point of second wave feminism
peopleHer seminal feminist polemic, The Second Sex, has been published in short-form to mark International Women's Day
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Evening Administrator

    £8 per hour: Recruitment Genius: This Pension Specialist was established early...

    Guru Careers: Executive Assistant / PA

    £30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...

    Ashdown Group: Graduate Application Support Analyst

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Reach Volunteering: External Finance Trustee Needed!

    Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

    Day In a Page

    Homeless Veterans campaign: Donations hit record-breaking £1m target after £300,000 gift from Lloyds Bank

    Homeless Veterans campaign

    Donations hit record-breaking £1m target after huge gift from Lloyds Bank
    Flight MH370 a year on: Lost without a trace – but the search goes on

    Lost without a trace

    But, a year on, the search continues for Flight MH370
    Germany's spymasters left red-faced after thieves break into brand new secret service HQ and steal taps

    Germany's spy HQ springs a leak

    Thieves break into new €1.5bn complex... to steal taps
    International Women's Day 2015: Celebrating the whirlwind wit of Simone de Beauvoir

    Whirlwind wit of Simone de Beauvoir

    Simone de Beauvoir's seminal feminist polemic, 'The Second Sex', has been published in short-form for International Women's Day
    Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

    Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

    Why would I want to employ someone I’d be happy to have as my boss, asks Simon Kelner
    Confessions of a planespotter: With three Britons under arrest in the UAE, the perils have never been more apparent

    Confessions of a planespotter

    With three Britons under arrest in the UAE, the perils have never been more apparent. Sam Masters explains the appeal
    Russia's gulag museum 'makes no mention' of Stalin's atrocities

    Russia's gulag museum

    Ministry of Culture-run site 'makes no mention' of Stalin's atrocities
    The big fresh food con: Alarming truth behind the chocolate muffin that won't decay

    The big fresh food con

    Joanna Blythman reveals the alarming truth behind the chocolate muffin that won't decay
    Virginia Ironside was my landlady: What is it like to live with an agony aunt on call 24/7?

    Virginia Ironside was my landlady

    Tim Willis reveals what it's like to live with an agony aunt on call 24/7
    Paris Fashion Week 2015: The wit and wisdom of Manish Arora's exercise in high camp

    Paris Fashion Week 2015

    The wit and wisdom of Manish Arora's exercise in high camp
    8 best workout DVDs

    8 best workout DVDs

    If your 'New Year new you' regime hasn’t lasted beyond February, why not try working out from home?
    Paul Scholes column: I don't believe Jonny Evans was spitting at Papiss Cissé. It was a reflex. But what the Newcastle striker did next was horrible

    Paul Scholes column

    I don't believe Evans was spitting at Cissé. It was a reflex. But what the Newcastle striker did next was horrible
    Miguel Layun interview: From the Azteca to Vicarage Road with a million followers

    From the Azteca to Vicarage Road with a million followers

    Miguel Layun is a star in Mexico where he was criticised for leaving to join Watford. But he says he sees the bigger picture
    Frank Warren column: Amir Khan ready to meet winner of Floyd Mayweather v Manny Pacquiao

    Khan ready to meet winner of Mayweather v Pacquiao

    The Bolton fighter is unlikely to take on Kell Brook with two superstar opponents on the horizon, says Frank Warren
    War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

    Baghdad fights to win back Tikrit from Isis – but then what?

    Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable