Consumer group wants investigation into calculation of credit card interest
April 28, 2007 by admin
Filed under News, News-Credit-Cards
The UK consumer group, Which?, has demanded an investigation into how credit card companies calculate the interest to be paid on cards, claiming that many companies are using a wide range of methods to calculate interest, which is not only netting them more money but is also causing mass confusion for credit card users.
According to the watchdog, these credit card companies are using around a dozen different methods in order to calculate interest on credit card repayments, and the confusion that this is causing is resulting in the companies making even more money from their customers.
Which? officials have gone on to say that the way that these credit card companies are calculating the interest to be charged means that comparing APRs on credit cards to find the best deal is ineffective. Which? states that credit card companies that make up for ninety percent of the credit card market are using around a dozen different ways to work out the interest. This includes the top twenty providers of credit cards. According to Which? there are now a number of factors that are used by these companies in order to determine how the interest will be calculated on a particular account.
One official from Which? stated: “People believe that APRs are a dependable way of comparing credit cards, but our research shows that APR cannot to be relied upon for true credit card comparisons.”
However, APACS officials state that using just one way to work out interest would also affect consumers, as the process used may not suit every consumer.
One APACS official stated: “There are a huge variety of cards on the market and some people prefer to have a lower APR but pay earlier, others might like a slightly higher APR but only want to pay interest on the amount left outstanding.”
Tom Smith
28th April 2007
