Credit card or debit card: which protects you better against fraud?

If something goes wrong with something you bought, the card you paid with decides how many routes to a refund you have. A credit card gives you two: Section 75 of the Consumer Credit Act 1974, which is a legal right, and chargeback, which is a voluntary scheme run through the card networks. A debit card gives you chargeback only. Section 75 applies to a single item costing between £100 and £30,000, even if you only paid part of that on the card¹.

That difference matters most for the money at stake. Under Section 75 the credit card provider has equal responsibility with the seller for faulty, unsatisfactory or undelivered items, so you can claim against the card provider rather than chase a trader who has stopped answering¹. Chargeback asks your bank to reverse the transaction, and your bank or credit provider might not agree to do it³.

Neither route covers everything. Paying through a third-party payment system, using a voucher, or choosing not to travel can all take the protection away, and there are deadlines that run from when you noticed the problem rather than from the purchase.

Credit cards give you two routes to a refund, debit cards give you one

The practical difference between the two cards is not the fraud detection, which is broadly similar, but what happens after a dispute. Section 75 makes the card provider as responsible as the trader for a breach of contract or a misrepresentation, and the law says the creditor and the supplier are jointly and severally liable⁸. That means you can pursue the card provider directly, without first proving the trader can pay.

Chargeback exists for both credit and debit card purchases¹⁰. It lets you dispute a card transaction and request your money back for something you have paid for, and it applies to all debit card transactions including goods costing less than £100, although the exact rules may vary between the American Express, Maestro and Visa networks¹¹. It is a voluntary scheme and not guaranteed to work⁶.

The gap shows up in the small print of who signs up. Card providers sign up voluntarily and exact rules may vary between Visa and American Express, so it is not as strong as credit card protection⁵. If you paid by debit card, you may be able to claim through the chargeback scheme, but it is a voluntary scheme and not guaranteed to work⁶.

There is a separate set of rights for payments you did not authorise, which is a different question from a dispute with a trader. Under the Payment Services Regulations your debit card provider should refund you immediately if your card was lost or stolen and you reported the unauthorised transactions without undue delay, and it cannot make any deduction or refuse to refund you if the disputed transaction was made after you had reported the card lost or stolen¹².

Section 75: cover on single items from £100 to £30,000

Section 75 is the strongest protection available on a card payment, and its limits are precise. It applies to a single item costing between £100 and £30,000, even if you are only paying some of that amount on your credit card¹. The cash price of the goods or services must be more than £100 but not more than £30,000¹³. It does not apply to charge cards or debit cards⁸.

The protection is a legal right rather than a scheme. Section 75 rights are only available where the provider has misrepresented something to you or breached their contract with you, so a change of mind is not enough¹⁰. Where it does apply, the card provider is as responsible as the trader for a breach of contract or a misrepresentation⁸.

Two features make it unusually useful. First, it covers the whole purchase even when you only put part of the cost on the card: if you paid any part of the cost by credit card, you can use Section 75 as long as the total cost of the item is more than £100 and no more than £30,000¹⁴. Second, recovery is not limited to the deposit. If Section 75 applies, it does not matter that the transaction was only partly financed by credit, and recovery is not limited to the amount you put on the card¹⁰.

The £100 floor is a floor on the item, not on your card payment. A Section 75 claim is a legal right for a customer to claim from the card provider if something goes wrong with a purchase, and this includes paying a deposit by credit card, even if that deposit is less than £100¹⁵. So a deposit on a £900 sofa sits inside Section 75, because the sofa is the item and it costs more than £100.

Chargeback: a voluntary scheme for debit, credit and prepaid cards

Chargeback is the fallback, and it is broader but weaker. It applies to all purchases, and it covers credit card transactions where goods cost less than £100, so Section 75 does not apply¹. It also applies to all debit card transactions including goods costing less than £100⁶. If you used a debit card to buy what turned out to be bogus goods or services, or if you used a credit card and the price was less than £100, you may be able to take advantage of the chargeback scheme⁸.

The weakness is that nobody has to offer it. It is a voluntary scheme and not guaranteed to work, and your bank or credit provider might not agree to do it³. Card issuers seek to claim back from the merchant the amounts you are claiming, and merchants can dispute your right to chargeback¹⁰. There are no guarantees your bank will be able to recover the money through chargeback¹⁶.

The deadline is tighter than Section 75's. You usually have around 120 days to raise a chargeback about goods or services, and it is best to claim as soon as you realise there is a problem¹. You may be able to use the card provider's chargeback process within 120 days if goods are not delivered, arrive damaged or not as described, or the trader goes out of business⁵.

One limit is worth knowing before you rely on it. Chargeback rights only apply to the amount of the transaction made on the credit or debit card, so if you paid a deposit on the card and the rest by bank transfer, only the deposit would be returned¹⁰. Section 75 does not work that way.

Section 75 or chargeback: how each one behaves

The two routes differ in who carries the risk, how long you have, and what happens if the answer is no. Section 75 is a legal right against your card provider, backed by the Consumer Credit Act 1974, and the creditor is jointly and severally liable with the supplier⁹. Chargeback is a request to your bank to reverse a transaction through the card network, and the merchant can push back¹⁰.

The FCA expects credit and debit card providers to handle Section 75 and chargeback claims in a reasonable timescale and to explain any delays or declinature clearly, including checking travel insurance cover, including policies held as part of a packaged bank account¹⁷. If a claim is declined, the reasons should be explained clearly and fairly along with any further options you might have, such as travel insurance or packaged bank account cover¹⁰.

Deposits and part payments: why a credit card can cover the whole purchase

This is where the two routes diverge most sharply, and it is the reason a small card payment can be worth making. If Section 75 applies, it does not matter that the transaction was only partly financed by credit, and recovery is not limited to the deposit¹⁰. Chargeback rights, by contrast, only apply to the amount of the transaction made on the credit or debit card, so only the deposit would be returned¹⁰.

Buy now pay later is a special case. Deferred payment credit agreements carry Section 75 of the Consumer Credit Act, so you may be able to get a refund from the lender if something goes wrong with what you have bought, the same protection you would have if you used a credit card¹⁸. But using a credit card with third-party payment systems can mean losing important Section 75 protection on items costing more than £100, and that includes buy now pay later schemes such as Klarna and Clearpay².

There is a cardholder rule too. For a Section 75 claim to be valid, generally the cardholder named must correspond to the person named in the holiday contract, but where the cardholder books the holiday for themselves and their family they can claim¹⁰. A second credit card holder who is not the debtor lacks Section 75 protection unless acting as agent for the debtor¹⁹.

Where neither Section 75 nor chargeback applies

Several common ways of paying sit outside both routes, and the pattern is that anything breaking the direct link between you, your card provider and the trader tends to remove the protection. Using your credit card with third-party payment systems can mean you lose important Section 75 protection on items costing more than £100, and that includes PayPal, Google Wallet, buy now pay later schemes such as Klarna and Clearpay, and third-party sellers on Amazon².

The same applies to online payment methods generally. In the event of a dispute, if you used a debit card or a credit card to service an online payment method such as PayPal, it is unlikely you will be able to use either the Consumer Credit Act 1974 or the chargeback scheme to claim from your card provider²⁰. You will not automatically be protected by either Section 75 or chargeback if you purchase through a third-party website¹⁵.

Open banking payments lose both. If you use open banking to make a payment to a business directly from your bank account, instead of using a debit or credit card, you lose Section 75 and chargeback²¹. Bank transfers more generally sit outside card protection: your money is not protected unless you pay by credit card or Direct Debit²².

Travel bookings have their own wrinkles. Section 75 usually only applies when the payment is made directly to the merchant who is actually providing you with services, though a travel agent may have taken payments as agent for the travel supplier, and it applies where a travel agent sells a package they put together, because the agent is a party to the contract¹⁰. If you accept a replacement flight, package holiday, voucher or credit note, that may settle the current claim, though if the provider fails to honour the alternative booking or the voucher expires unused, chargeback and Section 75 rights may then be available¹⁰. You will not have Section 75 or chargeback rights if something goes wrong with a new trip booked with a voucher where none of the price of the new trip was paid on a card¹⁰.

How to make a claim and what evidence you need

Start with the trader, then go to the card provider, and put it in writing. If the item cost between £100 and £30,000, contact your credit card company and say that you want to make a Section 75 claim²³. If you paid by debit card, contact your bank and say you want to use the chargeback scheme²³. A copy of your complaint letter goes to the provider that issued your card²⁴.

For a Section 75 claim, the ground you are claiming on matters. Section 75 rights are only available where the provider has misrepresented something to you or breached their contract with you¹⁰. If you are a victim of a misrepresentation and a credit card was used to purchase the goods or service, you may also be able to pursue your claim against the credit card company under section 75 of the Consumer Credit Act 1974²⁵.

If your card or account details have been taken rather than a purchase going wrong, the first step is different. Speak to your bank or building society straight away if you think your credit or debit card, online bank account or cheque book have been stolen or hacked²⁶. For a scam rather than a trader dispute, paying by credit card, debit card or PayPal rather than bank transfer gives you more protection, and credit card payments over £100 get more protection still²⁷.

If your card provider says no: time limits and the Financial Ombudsman

If you try to use chargeback and you do not get your money back, you can complain to the Financial Ombudsman Service if your card provider says it will not appeal to the trader's bank¹⁴. If you are not getting help from the credit card company, you can take your case to the free Financial Ombudsman Service²⁸. If your card provider refuses to refund your money, a complaint can be escalated to the Financial Ombudsman³⁰.

The ombudsman's time limits are generous but not unlimited. It has a time limit of six years from when you were sold the product, or three years from when you noticed, or reasonably became aware, something was wrong, whichever is later³¹. You can also go to the ombudsman if the business does not reply within eight weeks³². For a card payment or direct debit complaint, the business must look into things and get back to you within 15 days⁷.

The ombudsman can help in places the reimbursement rules do not reach. If you were tricked into making another type of payment where reimbursement rules do not apply, it can still help, including with me-to-me scams, card payments to genuine merchants, overseas payments and cash withdrawals handed to a scammer³³. It can also look at whether Section 75 applies where a credit card was used to put funds into a standard e-money account and then that account was used to buy something, which is a case where Section 75 might not apply³⁴.

Scotland has its own clock. In Scotland you have a limit of five years to make a claim, starting from the time you became aware there was a problem⁴. That is a consumer claim time limit rather than an ombudsman rule, and it runs from awareness rather than from the purchase.