Step-by-Step Guide to Reclaiming Credit Card Charges
If you have a credit card of course you will no doubt be aware of the fees you are charged by your lender should you transgress their rules of business. Types of charges include late payment fees and exceeding credit card limits, bounced cheque fees, refused direct debits, standing orders and other payments. It is possible to reclaim credit card charges easily.
The following steps detail how to reclaim credit card charges if you want to do it yourself. There are however a number of excellent companies who can do this for you if you don’t have the time, energy or patience to do this yourself.
Remember the prime aim here is to receive a refund of the money. So think of each step as part of a negotiation, to make your reclaim as quick and easy as possible. You should treat each credit card, whether a current or closed, as a separate reclaim.
Reclaiming credit cards charges won’t impact your credit score
Many people worry about the impact of reclaiming charges on their credit rating. Yet don’t worry. Banks and credit card companies can't put a note about your reclaim on your credit reference files, though the fact you missed a payment or went beyond your credit limit in the first place will have impacted it. While the reclaim won't be on your overall file, individual card companies may keep their own notes on you as a ‘difficult customer' and this may impact any future applications you make to them. So take out a spare card just in case.
Step 1. Find all your charges and add them up
You need to find all the fees you have been charged by each credit card lender. You can go back six years in England and Wales or five years in Scotland; these time periods are limited by law. This includes late payment and ‘over the limit’ fees but not standard account fees or interest.
What if I don’t have the details?
How many people have all their bills going back six years? If you’ve online banking access, first see what’s available there, if not send a letter to your credit card company requesting a fully comprehensive list of all past charges. Some will send you the information if you phone to ask so you could try this first.
Either way, you’ve a legal right to do this under the Data Protection Act. Unfortunately card companies are legally allowed to charge for this info - the maximum amount is £10 - and card companies being card companies, they tend to charge the full amount. So to save time, enclose a cheque for postal order for ten pounds in your letter.
The card company only has a maximum 40 days to respond. If you don’t hear anything back, follow up with a phone call and – if still getting a wall of silence - then report it to the Information Commissioner for a breach of rules
Step 2. Take out a ‘backup’ credit card in case your lender closes your account
If your card is still in use, some providers may decide close your account when they pay out. So if you’re still using the card you need to take this into account. Luckily it’s much easier to sort out with credit card reclaiming than with bank charges reclaiming. If you’re still using the card, there are a number of simple steps you can take.
If you can simply pay the debt off, great. If not, apply for a new card or cards to gain a big enough credit limit to shift the debt to; this should also save you money. Don’t be overly scared by the prospect of this; the Financial Ombudsman has ruled against providers closing accounts and it happens less than it used to. So if yours is closed it’s worth making an official complaint - and you may be due even more compensation.
Step 3. Write to your credit card company and ask for your money. Remember if you don't want to do this yourself you can use a claims company to do it for you. This will save you time and energy.
Now it’s time to contact the credit card company to ask for your fees back. All you need to do is write and say you believe all your past charges were ‘disproportionate’ and detail them. Say you want your money back. The past OFT report improves the chances of a successful reclaim, although it does mean there are different amounts you can ask for depending on when you incurred the charges, and how much work you want to put in.
How much should I ask for?
It is up to you about how hard you are willing to push your lender. Remember the OFT has indicated any charges higher than £12 are unfair.
Charges after June 2006. For any charges on or after June 2006, you were most likely charges £12 and as this is already set to the OFT recommended amount; you simply need to ask for the full £12 amount to be refunded.
Charges from before June 2006. Credit card charges from before this date will usually have cost between £30 and £35. With these, you can ask for either the full amount of each charge to be refunded or the difference between the actual charge and the OFT recommended fee of £12; for example, a charge of £35 minus £12 would give a refund of £23.
Providers are much more likely to pay out the ‘difference’ figure than the full figure; so if you just want the easiest route, this is for you. Alternatively, many have succeeded in getting the full fee back (especially for pre-June 2006) as credit card companies aren’t keen to justify their charges in court. Though this may mean more of a fight, and you could end up needing to ask the Financial Ombudsman to take on your complaint or start court action.
Whilst most people shouldn’t need to get this far, it’s likely to take slightly longer - but balance this with the possibility of receiving a bigger payout. Having said that, as I believe the charges are unlawful, I think it’s worth asking for the full refund at this stage. You can always change your mind later on if you are offered a settlement for the difference between what you were charged and £12.
If you were to go to court and win, you would be entitled to add 8% interest (not compounded) on top of your claim, from the date you were ‘first deprived’ of the money (i.e. the date of each charge).
Therefore as a negotiating tactic, you may want to ask for the interest as part of your initial claim. Do understand though, you’re not legally entitled to interest unless you win in court; but asking for interest now is all part of pushing the lender. You may get the interest on top but even if not, asking for it could help push the provider to settle quickly, as it may just say “here’s the money, without interest”. You will need to decide if you want to take it to court or take the offer. It’s up to you.
Visit http://www.creditclaimscompare.co.uk
for information on credit card charges and the excellent companies who offer a reclaim service for you if you don’t want to do it yourself.
