Q & A: How to deal with the perils of plastic

Credit cards may be flexible friends, but what are our rights when problems arise?
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The Independent Online
CHRISTMAS is a hazardous time for plastic card holders, and not just because of the spending. An average of 8,000 cards a day will be lost or stolen this month.

Q: Our department was having its Christmas drinks in a wine bar and my handbag, with credit cards, was stolen. Cancelling all my cards has been a nightmare. Isn't there a simpler way?

A: Card Protection Plan (0800 330000) offers a scheme which allows you to register all your cards for pounds 8 a year. If you lose them, you make one call to CPP. They report the loss to the individual issuers and arrange for replacements. A similar service is provided by Sentinel (0800 414717).

Q: Am I at risk if my cards are stolen?

A: Losing cards entails inconvenience but relatively little financial penalty. Your liability is usually limited to pounds 50, with no liability once you have reported the loss. However, you might have a battle on your hands if the card issuer maintains that losses are greater than they would have been because of your negligence. This might arise if, for example, your PIN number had been kept with your card. PIN numbers should never be written down.

Q: But isn't that easier said than done when you have a phone list of PIN numbers?

A: It's easy to collect them - a couple for debit cards, a couple for credit cards, and so on. But it is usually possible to select your own numbers so that memorising them is easier.

Q: Am I liable if my stolen cheque book is used?

A: Banks should re-credit you with any cheques they have debited if they don't bear your signature. However, there is still the possibility of your negligence if, for example, you kept your cheque guarantee card with your chequebook.

Q: Is there any way of getting round the pounds 50 limit for guaranteeing cheques?

A: Even many small shops and bars will now accept some form of plastic card - including debit cards, which are a direct alternative to cheques. With debit cards you can spend as much as your current account's credit balance (or overdraft limit) will allow. But cash or cheque is still the only way to pay in many places. If a single purchase comes to more than pounds 50, retailers may accept more than one cheque if each is backed by a guarantee card.

Q: Is that legal?

A: If you pay in this way you are breaking the conditions of the card. But it's the retailer who is most at risk. If your bank detects that you have issued several cheques for one transaction and there are insufficient funds in your account, the cheques may not be honoured. A way around this problem is to switch to a bank account which offers a guarantee card with a higher limit. Limits of pounds 100 and pounds 250 are available.

Q: When you buy with a credit card do you have more rights than with a debit card?

A: Yes. Credit card users benefit from rules in the Consumer Credit Act. If you buy faulty goods or services or the retailer goes bust before delivery, you can make a claim against the credit card company. The goods have to be worth at least pounds 100 to get this protection. Debit cards are not governed by the same rules, nor are charge cards where there is no credit agreement.

Q: Does the protection apply to Christmas presents?

A: You don't lose any consumer rights if you buy something and give it away but it will normally be up to you (rather than the recipient) to enforce those rights.

q Questions and answers compiled by Anthony Bailey.

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