What’s the difference between a credit card and a debit card? Anyone who thought they had booked a holiday with tour operator XL Leisure has just found out the hard way. If you booked your holiday with a credit card, says Simon Calder in The Independent, you are looking at a “mighty inconvenience”. If, on the other hand, you did so with a debit card you are looking at a “massive loss”. Under Section 75 of the Consumer Credit Act if you buy something that costs over £100 with a credit card, the card provider becomes liable for any non-supply of the service or product in question (be it a holiday or a TV bought from a dodgy internet site).
The upshot? Call your credit-card company, request a claim form, fill it in and you should get your money back. Not so if you paid with a debit card. Banks and building societies are “not legally obliged to help”, says Moneysavingexpert.com, so most probably won’t. You are in with a chance if you paid with a Visa debit card – Visa run a Debit Chargeback system, which works as their own refund system – but otherwise, you are on your own. The same goes if you paid with cash or a cheque.
The good news, such as it is, for travellers at least, is that if you book with an Air Travel Organisers Licensing (ATOL) protected travel agency, you should always be fully protected by the group’s compensation scheme. If you haven’t gone on holiday when your provider goes bust, you get you money back. If you have, you get to keep staying in your hotel and then get flown back by someone else, for free, at the end of your trip.
The obvious lessons from all this are simple. First, mostly when you buy things, you are best off buying them with a credit card. And second, if you are buying a holiday and don’t have a credit card, buy a package and buy it from a protected agency. This is something to bear in mind, says The Independent, given that “more budget airlines and smaller travel companies” could well follow XL into the abyss over the next year.
But the real lesson here has got to be about savings. A good many of the people stranded on Greek islands and the like in the wake of the XL blow up appeared to have no financial resources of any kind to help them out of their fix. That left them entirely reliant on outside help. In many cases, that meant being stuck in the airport waiting for a flight for days and, in some particularly miserable cases, it apparently meant being chucked out of hotels for non-payment. Everyone – be they a budget holiday maker or an ex-employee of Lehman Brothers – should have a few months’ worth of income in an instant access savings account so that they can deal with life’s many emergencies. Anyone who doesn’t is more likely than not to find they regret it over the next few months.