Consumers unaware of credit card interest rates

A new survey by MORE TH>N has discovered that most credit card users do not know what interest rate they are being charged.

15:59 19 October 2004

A new survey by MORE TH>N has discovered that most credit card users do not know what interest rate they are being charged.

The organisation points out that the range of offers including balance transfer deals and interest free periods on purchases confuse consumers and the fact that different card companies calculate interest rates differently further muddies the water.

"It's concerning that significant numbers of people, especially those with multiple cards, do not know what interest rate they are paying," said Graham Hollebon, head of MORE TH>N credit cards.

Research from the firm shows that 15.7 million people - equivalent to 55 per cent of card holders - do not know what interest rate they are being charged.

Mr Hollebon points out that a move to a single APR calculation, set to go ahead on October 31st, will be an important step forward - but that it will not entirely solve the problem.

"The industry still needs to do more to increase consumers' understanding of the deals they are taking out, providing simple explanations of APRs, balance transfer rates, charges and rewards," he noted.

MORE TH>N's survey also found that almost two in three people (64 per cent) have had the same credit card for three or more years and more worryingly ten per cent of those who have taken a card out in the last year admit that they did not check what interest rate they would be paying first.

"With nearly half of people using their credit card for everyday purchases, but a significant number still not paying their balance back in full each month, it is crucial that cardholders are fully aware of the consequences of their actions," said Mr Hollebon.

"There are a vast array of deals available on the market and there's absolutely no need for people to stick with uncompetitive cards," he added.