Reclaim your credit card charges

Recently the ongoing court case regarding bank charges has been grabbing a lot of headlines. While it’s being sorted a stop has been put on any reclaims. However, this hasn’t affected a similar process to do with reclaiming credit card charges.

Three cheers for the OFT

Credit card companies charge penalty fees for three misdemeanours. These are missing a monthly repayment, having a monthly payment returned as unpaid and exceeding your credit limit.

Back in April 2006, the Office of Fair Trading ruled it would investigate any credit card company that charged a penalty fee of more than £12 for these hideous crimes. By astonishing coincidence, all the major credit card companies reduced their fees shortly afterwards from around £35 to £12, where they have remained ever since.

It’s estimated that credit card companies were making around £300m a year from these excess charges. Although excessive bank charges are reckoned to be over double this amount, it’s still a significant sum and many people will be able to reclaim a few hundred pounds in past charges for relatively little effort.

Those who frequently used credit cards online, need to be aware of the credit card processing service that handles the transaction. Make sure that the connection is secure and trusted, before divulging any personal information.

How far back can you claim?

This depends on where you live. There is a legal time limit of 6 years if you’re in England and Wales. Scots, unfortunately, can only go back 5 years

If you’re the organised type, you may have credit card statements going back this far. But if you don’t there’s an easy solution. Simply write to your credit card company and request the information. Under the Data Protection Act, they can only charge you a maximum of £10 for this information.

Don’t forget that you may have old credit cards that you no longer use and that you can reclaim charges on these as well. As it may cost you £10 for each credit card, you’ll probably want to concentrate on the cards you used the most as these are more likely to have had charges.

How much can you claim?

There are two schools of thought here. You can either claim the full amount of the credit card charges you’ve paid. Although the Office of Fair Trading has signalled £12 as not being an unreasonable charge, the true cost is probably a fraction of this and it’s yet to be formally tested in a court of law.

The second option is to reclaim only the excess over £12. This is more likely to be successful but you can always fall back to this amount at a later date so many people prefer to claim the full charge as a starting point

You can also claim interest for any old charges. The standard amount to use, as it’s the amount used in the courts, is 8% for each year since each individual credit card charge was levied. So for a £30 charge levied 5 years ago you could add an additional £12 (40%) in interest. This can boost your claim significantly so it’s worth a little effort to work it all out.

How can you claim?

It’s as simple as writing a letter to your credit card company outlining that you believe the charges are illegal, listing what you’ve been charged and how much you like to reclaim.

Although some credit card companies will pay up, most will use delaying tactics or make a partial offer. You could accept the partial offer but, if not, the next step is to threaten that you will either take the case to court (the small claims court will be most practical in many instances) or to the Financial Ombudsman. Many people are using the latter as it’s free for consumers.

A couple of final warnings

Let’s close this piece with a couple of areas to watch out for.

Firstly, it’s quite likely that the credit card company will close your account if you take this course of action, saying that it’s left with no alternative if you don’t accept its terms and conditions. So it’s advisable to have another credit card account ready to go before you start the whole process.

Secondly, there are a number of companies around who will make these reclaims on your behalf. Typically, they charge 25% of any amounts refunded. Although these can save you time, it’s quite a price to pay for something you can do yourself with relatively little effort.

Good luck with your reclaim!