No volcano credit card refund?

Many Britons could be left with financial problems after it emerged that credit card companies may not pay out for losses incurred due to the Icelandic volcano.

It had previously been believed that even if travel insurance did not cover travellers, card providers would have to refund them due to breach of contract by the airlines.

However, those who have racked up extra debt caused by enforced holiday extensions may not get the relief. This is because in 'exceptional' or 'act of God' circumstances, the airlines' small print dictates that they cannot be held in breach of contract.

If the airlines are not in breach, then the UK Cards Association argues that the credit card industry does not have to pay out to help those who now risk personal debt problems.

Kevin Still, director of Atlantic Financial Mangement, says: "Natural disasters seem to be contributing more and more to rising insurance premiums and other payment shocks, sometimes creating serious debt problems where households do not have financial reserves for unexpected expenditure. We have seen this reflected in the rise in inflation, which has the effect of squeezing disposable income."

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