Claiming a refund from credit card providers

If you previously held a credit card that you're unable to repay, we can assist you in seeking compensation if the lender acted unjustly or negligently.

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What are credit card refunds?

By using a credit card, you are essentially taking out a loan, with the credit card company providing you with a pre-approved limit based on your financial standing. The credit company conducts background checks to verify your ability to repay the loan without facing financial hardship.

If you have previously received credit that exceeded your financial means, you may be eligible to request a reimbursement from the credit company.

How to check if you have a valid claim

To ascertain if you have a legitimate basis to claim a refund for a credit card loan, you need to evaluate your financial condition and analyze whether you were capable of repaying the loan. Take into account the following queries.

No upfront costs

Fees or charge not clear?

Were the fees associated with the credit card made clear to you before you agreed to take it on?

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Unable to pay bills?

Did you struggle to pay bills or mortgages due to the size of your credit payments?

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Rolling over credit?

Did you ever need to take out additional credit to pay your initial credit back?

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Lenders taking automatic payment?

Did the credit card company ever take payments from your account without notifying you? Did these automatic payments put you under financial stress, leaving you unable to pay for essentials?

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Encouraged to borrow further?

Did the company ever promote offers to you that encouraged you to borrow further to access better deals?

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Unfair lending?

Did the company continue to offer additional loans despite your inability to pay back the initial loan?

If you answered yes to any of the above questions, you may have a valid claim against your credit company.

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The Legal View

"Rules imposed by the Financial Conduct Authority mean any firm offering credit has an obligation to check your financial situation to make sure you could afford the credit they were providing, before giving it to you."

Key Fact

The Financial Ombudsman Service (FOS) reviews complaints made about short term loan companies by checking to see if they completed the necessary affordibility checks before lending money. Many claims are ruled in the claimants favour if the lender was shown not to acted responsibly by carrying out the necessary checks needed to identify if you were in financial difficulty.

Following on from these questions, there are two key bases for claiming a refund on a credit card. These are unaffordable lending and unfair treatment.

Unaffordable Lending

To determine the legitimacy of your claim, it is important to assess whether the lender conducted a proper evaluation of your 'creditworthiness' prior to approving the loan. If they failed to do so, it would be classified as 'unaffordable lending'.

According to the FCA guidelines, lenders are obligated to conduct a 'reasonable' assessment that is proportionate to the type and amount of credit being granted. Furthermore, this assessment should be repeated whenever there is a 'significant' increase in credit in the future.

Assessing Income

It is the responsibility of the lender to verify that the borrower has the capacity to repay the loan using their income, savings, or other assets. Additionally, they must guarantee that the borrower will not require additional loans to fulfill the repayment obligations and that the repayments will not have a substantial detrimental impact on the borrower's financial state.

Assessing the customer’s expenditure

The lender must also evaluate the borrower's typical expenses, including necessary payments for living expenses, debts, mortgages, and any other essential costs needed to sustain a reasonable standard of living.

If there is any uncertainty regarding the borrower's ability to repay the credit while meeting the aforementioned expenses, the lender should refrain from approving the loan.

Unfair Treatment - "How the lender acted"

In case you believe that the lender treated you unjustly, you might have additional reasons to file a complaint. Here is a compilation of ways through which you could have been subjected to unfair treatment.

  • If you felt that the lender did not deal with you in a sympathetic and overall positive way.
  • If the lender pressured you into extending your loan.
  • If the lender did not provide you with a document outlining all the information you needed to know before taking out a loan.
  • If the lender used a debt collection agency against you without directly trying to resolve the issue with you first.
  • If you were not warned of what would happen if you missed repayments before you signed your agreement.
  • If money was taken from your account by the Continuous Payment Authority (CPA) without a warning.

What evidence do you need to make a claim?

To seek a refund from your credit provider, you must collect some evidence that demonstrates the loan was unaffordable and that the credit company acted negligently or treated you unfairly.

The normal procedure for making a claim to your credit company is outlined below.

  • Step one: Make a list of all the credit card companies you have used that you think acted irresponsibly.
  • Step two: Write down how much you earned each week or month when you took out the loan.
  • Step three: Note down all the expenses you were responsible for when you took out the loan. This list should include all essential expenses such as rent, utility bills, council tax, mortgages, broadband, mobile phone contracts, car insurance, home insurance, weekly groceries, essential clothing, childcare, and any other debts.
  • Step four: Write a letter to each credit company including this information. Explain that your loan was unaffordable and request a refund.
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Did you know?

On average, the uphold rate for payday loan redress claims is 44%.

Common Questions

How much can I claim in a refund?

The amount of compensation you are eligible to receive is contingent on how your financial status would have been if the credit company had not treated you unfairly or irresponsibly.

The refund calculation involves adding up all the fees, charges, and interest you paid, followed by an additional statutory 8% interest rate for each year you held the credit.

How successful are refund claims on average?

The success rate for credit card compensation claims is typically around 38%.

A significant number of claims are not reviewed by the Financial Ombudsman Service (FOS) and are instead settled directly between the claimant and the lender.

Nevertheless, it is advisable to verify whether you may be eligible for a claim if you believe that a lender treated you unfairly.

How long do I have to make a claim after taking out a credit card?

According to the FOS, you have a timeframe of 6 years to initiate a claim after the credit card was provided.

Alternatively, you have a period of 3 years from the moment you were informed that you could seek a refund. Therefore, if you were not previously notified about the option of claiming a refund, you may still be able to make a claim for a credit card that was issued more than 6 years ago.

Don’t Delay. Check Now.

Each company has a different deadline for claims, and for some payday lenders, the deadline has already passed. It only takes 5 minutes to complete the form, so it's worth checking now to see if you're eligible to make a claim.

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