Beware of credit card costs
April 2, 2007 by admin
Filed under News, News-Credit-Cards
Britain’s top 20 credit cards use 12 different ways to calculate interest, meaning that ‘cheap’ credit cards could cost more than you may think. 
According to Which?, the APR (annual percentage rate) figure may not be the best way to compare cards, but it adds that this could be just one way in which firms are duping consumers.
“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,” said Alena Kozakova, principal economist at the consumer watchdog.
“Two people who have two different credit cards with the same APR and who use their credit card in the same way, could be paying very different levels of interest.”
In the Which? calculations, people paying off the same amount of money with identical spending could pay 43 per cent more in interest on cards charging 15.9 per cent depending on how the interest is calculated and when it is charged, while the best 15.9 per cent card can also work out cheaper than cards charging 11.9 per cent.
Which? has now complained to the Office of Fair Trading (OFT) and Ms Kozakov added: “Consumers have to be able to make meaningful comparisons on the basis of APR. We are calling on the OFT to standardise interest calculation methods so that consumers can compare like for like.”
