How to pay and protect your purchases – Forbes Advisor UK



Britons plan to spend more on Christmas shopping this year than in 2020, according to the Shopping for Christmas 2021 report, an annual joint venture between and GlobalData.

After a year when many were laid off or laid off due to the coronavirus pandemic, 13% fewer (62%) say they will use their own income, opting instead for credit cards, store cards, payday loans and loans.

Despite this, the report predicts a 6.3% year-over-year sales increase from mid-November to the end of December, peaking with almost £ 85bn spent this Christmas season. It is also 1.9% more than in 2019.

Falling on November 26 and 29 respectively, Black Friday and Cyber ​​Monday are expected to play a big role in rebounding sales, as in-store and internet shoppers can take advantage of the best pre-Christmas deals these days.

In short, this year more than ever, consumers need to take note of how to shop securely in stores and online, as well as how to use the best payment methods for their situation.

Spend wisely on credit cards

Paying by credit card is a smart way to protect your Christmas spending, should something go wrong with your purchases.

This is because if you spend between £ 100 and £ 30,000 on your card, a consumer protection law kicks in called the Consumer Credit Law.

Section 75 of the law states that your credit provider and the retailer will also be liable if goods are lost, damaged, not as described, or if the retailer goes bankrupt and you cannot claim what you bought. .

This protection means that you can request a refund from the supplier of the credit card alongside the retailer you purchased it from.

Be careful though – purchases made through a third-party retailer such as Amazon Marketplace (which represents individual sellers) and online ticket agencies (acting on behalf of the ticket office), will not be protected as there is no a “direct transactional relationship” between buyer and seller.

And in most cases, section 75 won’t apply to third-party payment platforms like PayPal, either. They usually run their own protection programs, although these are often not as robust.

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Interest-free purchases

While credit cards are great for protection, you’ll need to choose the right type to make sure you don’t pay interest.

If you need to borrow, a 0% shopping credit card allows you to write off the cost of your Christmas shop over an interest-free period of time, or even more than two years in some cases.

This can be a useful alternative to taking out a loan, which is typically used to borrow larger sums of money, and may require paying more interest than using a 0% credit card.

However, it is essential that you not only meet your minimum monthly payments, but also resolve your debt within the specified 0% period, as any remaining balance after that will start earning interest.

If possible, try to erase your Christmas 2021 spending within 12 months, before you start preparing for Christmas 2022.

Get paid to spend

If you don’t need to borrow this year, but plan on spending a lot with your card, why not grab something back with cash back or a rewards card?

A cash back credit card will pay you a percentage of the money you spend as a rebate on your balance, while reward credit cards offer points that you can use for goods or services at home. ‘to come up.

However, unlike buying 0% credit cards, you will have to repay your expenses in full each month to avoid interest, which on these cards can typically exceed 20% of the APR (variable).

Use of your bank card

Choosing to use your debit card for your Christmas shopping may be a budget-wise option, but it offers lower levels of protection because you won’t be covered under Section 75.

However, you may be able to use the chargeback system to get your money back instead if something goes wrong.

There is no upper or lower limit on how much you can claim via chargeback, but unlike section 75, you will have to show that you have exhausted all efforts with the retailer before the bank considers to reimburse you.

Buy now, pay later

A huge third of the UK population has used Buy Now, Pay Later (BNPL) programs, according to the Which Buy Now Pay Later report from July 2021.

These services allow buyers to make purchases, which they can repay in interest-free installments over a set period of time.

For example, once approved, buyers using PayPal credits and spending more than £ 99 will not have to pay upfront, but will be charged 0% interest on the purchase for four months, and again automatically. every time they spend more than that amount.

Other payment companies such as Clearpay and Laybuy also offer BNPL programs, with varying terms over 0% periods and expense allowances.

However, just like with a credit card, the minimum payments still apply to BNPL plans, even during the 0% period, while any balance remaining after this point will be charged at interest rates similar to credit cards. – 19.9% ​​APR (variable) in the case of PayPal credit.

Importantly, while these programs will soon be regulated by the Financial Conduct Authority, they are not currently. This means that, unlike a credit card, users are not subject to affordability checks to ensure they can handle refunds, they are not protected under Section 75, and they are not. cannot escalate complaints to the financial ombudsperson.

An exception to the rule is Monzo’s Flex service on his checking account. Account holders can make interest-free refunds on in-store and online transactions, and get refunds on purchases made in the last 14 days, if they decide they actually want to pay in installments. Section 75 protection applies, but beware of the 19% APR due on repayments made over terms longer than six or 12 months.

Using digital devices to pay

It is possible to pay for your online purchases using your smartphone, tablet or smartwatch with Apple Pay or Google Pay (formerly Android Pay) once you have linked your credit or debit card.

A third of the UK population is registered for this type of payment, according to 2020 figures from the UK Finance trade association.

You will benefit from the same level of protection offered by the card if you were to use the card itself.

These electronic payment systems also have end-to-end encryption which ensures that your personal banking information remains private and is not transferred to the retailer.

They also verify your identity through your device’s PIN or password or by using facial recognition or Touch ID.

It will also be the first Christmas where retailers can accept payments of up to £ 100 with contactless cards. The amount was increased on £ 15 in October.

Cash in your loyalty points

Keep in mind that upi can also use any loyalty points you have accumulated during the year, perhaps on sites such as Amazon and eBay, for your Christmas shopping.

They can be converted into vouchers or gift cards and exchanged with the brand or its partner merchants.

Keep in mind that many expire at the end of the year as well, so act as soon as possible.

Ensuring online security

Scammers appreciate this time of year as much as shoppers, and only you can make sure you’re safe on the internet.

To avoid more than you planned for this Christmas, respect the following rules:

● make sure all sites you visit have URLs that start with “https” rather than “http” (the “s” stands for “secure”)

● make purchases only through a secure Wi-Fi connection

● create unique passwords for each of your online accounts

● use multifactor identification

● Check your statements for anything that seems inappropriate.

For more details on online security, see our guide.

Protect your purchases at home

Figuring out what to do with your purchases after they arrive is also worth thinking about.

While many gifts will be couriered directly to the recipient this year, there are many more that you can store at your property first. This means that they will need protection against theft, damage, and other potential issues.

Some home insurers, such as Sainsbury’s, Halifax and Aviva, offer an automatic increase in content coverage for the month of December, while other insurers offer different terms.

Check your policy or contact your supplier for details.

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