If keeping up with the credit crisis has left you questioning your spending habits and whether or not using your credit card this ‘one time’ will result in your entire portfolio of accounts being yanked from beneath you, take comfort for you are not alone. With the crimbo season comfortably upon us, many are pondering over whether they should use their overdraft to make purchases or their trusted credit card?

Web based shopping

Online purchases are set to be at record highs this year as many appreciate that net prices are generally cheaper than those offered in stores. However just because you are able to relax in your pyjamas as you shop, it does not mean your approach to purchasing online should be relaxed or laid back. Rather the opposite should be employed by online shoppers, keep your guard up as there are many companies that due to the credit crunch will be out of business within a month or two.

This was highlighted by Brad King, the managing director of the price comparison site Compareandsave.com when he said “there is a risk that people may be buying goods from business that are likely to collapse during these difficult economic times”. Imagine if something were to go wrong with your purchase or worse still the money is taken from your account instantly but you never see the item you ordered.

What should I do?

What are your options, how can you protect yourself and your hard earned cash better? We recently witnessed “the collapse of Britain’s third largest tour operator XL Leisure”, and are currently waving goodbye to Woolworths, the nation’s favourite ‘get it all here’ store, with such information to hand can we really afford to be nonchalant with our credit cards? Statistics show that nine out of ten of us already shop online at least once a month, it has been predicted that our online spending over the next five years will increase by 129 per cent.

Section 75 of the 1974 Consumer Credit Act states that, if something were to go wrong with your purchase, your credit card company and the retailer are “jointly and severally liable”. The Act provides protection for products costing anything between £100 and £30,000 that you have purchased with your credit card. Such peace of mind is not on offer with debit cards, making this type of flexible friend all the more attractive. New laws have been implemented to include products purchased abroad, so if a company does happen to go out of business, or the product arrives faulty or not at all, you can rest assured that your money is not lost forever, it will be returned to you.

That said it is wise to remember that this Act does not necessarily apply to purchased made via PayPal or any other ‘middle man’ payment system as your credit card’s agreement is now with the payment system and not the retailer directly. Most payment systems operate some kind of dispute procedure however there is no legal enforcement that protects you the customer, leaving you and your credit card’s contents at their mercy.