The AC, she just can't take it, Jim.
August 12, 2013 11:24 PM   Subscribe

Is there more consumer protection if I use a credit card to pay for a major purchase like an air conditioning unit?

I noticed water spotting on my ceiling, and while at first we thought we'd just have to replace the air conditioner drip pan, it looks like the entire condenser coil, and a bunch of the surrounding cabinet has rusted through. The AC unit is 14 years old, was builder grade economy junk, and can't be repaired for much less than it would cost to buy a new, more efficient, more environmentally sound unit.

That said; I'm in serious sticker shock. As happens when presented with estimates that have two numbers in front of the comma.

The contractor that I'll probably use was recommended by people I trust, has an A+ BBB rating, and good reviews on your standard review sites. He gave me a 3-tiered estimate; 10k if it's a check from a local bank, 10,5 if it's a long distance check; (USAA, which has no branches near us, so he's looking at a 10+day hold for turnaround), or 10,740 if I use a credit card.

I can get a signature loan from USAA, and transfer the funds into my local bank, at rates around 5%, my credit card rates are also 5%. It seems a significant discount to pay with a local check, but am I shorting myself some level of consumer protection by foregoing the Visa card?
posted by dejah420 to Home & Garden (6 answers total) 2 users marked this as a favorite
The only real way to know for sure is to look at a copy of your cardholder agreement. Every card comes with different types of consumer protection available on it, so without knowing the exact kind of card you have (and maybe not even then; an older card might have a different agreement than a newer card, for instance) there's no way any of us can really say anything for sure.

In any case, it should be a fairly simple matter to get a copy of this agreement from your credit-card-issuing bank if you don't happen to have a copy handy.
posted by Aleyn at 11:54 PM on August 12, 2013

Yes, you are shorting yourself a number of consumer protections, the exact type and number of which will be dependent upon type of credit card you have; call and have your issuer walk you through it or look at your agreement. Different levels (signature, platinum, etc.) of cards from the same issuer offer different protections. Think in terms of half-done work, damaged infrastructure, a bad unit, etc. and the ability to have the credit card company issue a chargeback. Large purchases or tangible items by credit card often have insurance protection against theft, damage, etc. (OK, nobody is going to steal your A/C, but you know what I mean.) Also, if your card is a points-earning card, you will be losing the cash-back potential.

(Also, while I understand why using a card will cost you more than a local check, because it's costing him more in merchant fees, I am stymied by how the contractor came to a $740 cost, as I can't imagine the merchant fee on $10K in transactions could be even half that. You might want to ask how he got that calculation.)
posted by The Wrong Kind of Cheese at 12:05 AM on August 13, 2013 [2 favorites]

American Express has a lot of good consumer protection benefits built in to their cards.
posted by Jacqueline at 12:24 AM on August 13, 2013 [1 favorite]

Yeah I'd be suspicious about that difference signifying he doesn't want the hassle of a credit card dispute, which suggests he has had them. Tell him you'll pay him with a check but buy the AC unit on your card from his supplier. The contractor isn't selling you the unit, his supplier is, and I wonder if he is trying to hide his real parts price from you and pocket the difference between what he pays his cousin and what the cousin writes on the invoice.
posted by spitbull at 4:32 AM on August 13, 2013

Best answer: As mentioned above, various cards have various levels of consumer protections built into the agreements. Regulation Z, which implements the Truth in Lending Act, among other things, provides an additional layer of protection. Specifically, Reg Z provides:
When a person who honors a credit card fails to resolve satisfactorily a dispute as to property or services purchased with the credit card in a consumer credit transaction, the cardholder may assert against the card issuer all claims (other than tort claims) and defenses arising out of the transaction and relating to the failure to resolve the dispute. The cardholder may withhold payment up to the amount of credit outstanding for the property or services that gave rise to the dispute and any finance or other charges imposed on that amount.
12 CFR 226.12(c).
posted by monju_bosatsu at 6:27 AM on August 13, 2013 [1 favorite]

Response by poster: Just a bit of follow up: I had two other companies come out to give bids, and they've all come in within a couple hundred dollars of each other. The unit I'm putting in is a super efficient, energy star, 16 SEER Rheem Prestige RPRL series, variable speed, 5 ton heat pump with communicating thermostats. (I don't know why the thermostats are important, but apparently they are.)

I renegotiated with the vendor for a 2% fee for using a credit card. Basically I'm splitting the cost of using plastic with the vendor, which seems fair.

That said; after advice here, I went to the site and read the user agreement, and I do have significant protection built into the card, especially for home improvement projects, so I'm going to put the unit on my card, and negotiate with the bank about a lower interest loan.
posted by dejah420 at 9:53 AM on August 13, 2013

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