'Ludicrous' Credit Card Rate Confusion Criticised
Consumer group exposes the hidden costs of credit cards
2nd February 2006
Consumer group Which? is calling for the credit card industry to be overhauled to make it easier for people to see how much their cards really cost.
Although all cards must make their APR clear to customers or applicants, there are currently 14 different ways of actually applying interest, making the APR all but meaningless for side to side comparisons of different cards.
In an extreme example, the report calculated that the Cahoot credit card with its attention grabbing rate of 11.8% was actually more expensive than the HSBC card, with an apparently more expensive interest rate of 13.9%.
Differences in when the cards started and stopped charging interest would lead to cardholders paying around 5% more interest with the Cahoot card, in the calculation performed in the report.
Which? editor Malcolm Coles described the situation as 'ludicrous' and called for the way of charging interest in the credit card industry be standardised to allow consumers to compare like with like and get the cheapest deal.
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