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Debit or credit? The safest way to pay for your holiday

28th July 2022

Are you covered if your summer break is cancelled, or you fall victim to a holiday scam?

There’s nothing like having a holiday to look forward to - counting down the weeks and days, making plans, checking out your resort’s restaurants online and buying new beachwear is all part of the fun.

And if the pandemic means you’ve been waiting even longer than usual since your last break, your anticipation levels are probably at fever pitch.

However, this summer it doesn’t seem to be as simple as booking your trip and turning up at the airport with nothing more to worry about than remembering your passport and factor 50.

Cancelled flights, airport staff shortages and other Covid-related disruption have made the great British getaway a bit of a lottery and an increase in scams and holiday fraud*.

All of this may even have put you off booking all together. But whether you are wary of taking the plunge, or nervous that your carefully planned jaunt to the Med will turn into a nightmare of queues and cancellations, you can take steps to protect yourself.

And one of the most important factors is how you pay for your break in the first place.

This simple guide will tell you what you need to know to book your holiday and be confident you won’t be out of pocket if the worst happens.

Should I pay for my holiday using a credit or debit card?

It may be useful to pay for your holiday with a credit card so that you can spread the cost over a few months. But make sure you have a plan to repay the balance so the debt doesn’t turn into an unwelcome holiday hangover. With the rising cost of living, holidays may feel like an extra squeeze on your finances. If you're struggling to pay off your holiday by the time it comes to booking next year's, it may be worth scaling back.

Paying with a credit card is not just about budgeting - it also comes with important protection if something goes wrong.

You should always try to resolve the issue and claim a refund through the supplier first, but Section 75 of the Consumer Credit Act means you may be covered if the supplier breaches their contract with you. Examples of a breach would be; if the goods or services aren’t provided, or the goods are faulty, or if they give you misleading information about the product or services, you’re buying from them. If this happens, you may be able to claim a refund from your credit card provider. This means you should be covered if for example your travel operator, hotel or airline went out of business after you had paid for your holiday. Be careful when booking through an agency or third party. For example, if you book a cruise and the cruise company charters the vessel from a third party that can break the debtor-creditor-supplier chain meaning that you are not covered by Section 75.

This cover does not apply if you pay by debit card, but you may be able to get a refund via the Chargeback scheme. However, this is not legally binding and there is no guarantee of a payout.

What if my trip is cancelled because of new Covid travel restrictions?

The last two and a half years have seen millions of holidays cancelled, postponed or replaced with vouchers.

If you have paid for a new holiday, and it is cancelled because of updated Covid travel restrictions, then you may be able to claim under Section 75, or your travel insurance.

However, many insurers have updated their terms since the pandemic - there is a more comprehensive guide on the government’s Moneyhelper site.

Can I use a 0% credit card to go on holiday?

You can, and you would have the usual credit card protections, and no interest to pay for the interest free period. However, as with all credit card purchases, make sure you will be able to make the repayments. And if you are planning to repay the cost of the holiday over a number of months, check when your interest-free period comes to an end.

How do I know if a holiday company is legitimate?

Holiday booking fraud is up by 120% according to Action Fraud, with the average victim losing £1,868.

Scams include criminals listing rental properties they don’t own, or that don’t even exist, websites offering holidays much cheaper than established companies, and even fake versions of legitimate travel operators’ home pages.

There are ways you can protect yourself. If a deal seems too good to be true, then it probably is.

Check web addresses - fraudsters may have set up a website with an address that is a few letters different from the real company.

If you are paying online, only use a secure payment system - do not transfer money directly to a bank account.

Reputable travel companies will be registered with ABTA or ATOL, industry bodies that give you protection if something goes wrong with your holiday. Fraudsters may claim to be registered, and even display logos, but you can check direct with ABTA and ATOL.

For more information on spotting a scam, click here.

Can I get a refund if I have been scammed?

If you have paid money to a holiday fraudster, you may be able to get your money back, but it will depend on the circumstances, including how you paid.

The details for credit and debit card payments, including Section 75 protection and Chargeback can be found here Credit card chargeback.

If you have paid a scammer by bank transfer, those protections will not apply.

*120% increase in holiday scams, holidays are in jeopardy of being cancelled at the last minute.