Judging The Hidden Costs Of Credit Cards

Recent reports from CreditAction and the National Debtline appear to show that UK consumers are becoming more financially aware and are looking to reduce their levels of personal debt which have spiraled seemingly out of control over the past few years. Despite the industry wide introduction last year of the "honesty box" in all credit card statements designed to outline the costs of loans and any additional charges, it seems that the activities of some of the financial services, especially certain credit card companies are misleading consumers and making it difficult to determine the true costs of many financial products. The consumer group Which? (http://www.which.co.uk) has launched an attack against the interest rates quoted by credit card companies. The problem revolves around the fact that there are around 20 different methods used by lenders to calculate interest charges and these make it extremely difficult for consumers to determine which credit card is cheapest, and have a huge impact on the amount that is ultimately repayable. Which? states that, "if you had two cards with the same interest rate and used them in exactly the same way, one could end up costing over twice as much as the other just because it calculated your interest differently." Moneynet (http://www.moneynet.co.uk ) chief executive, Richard Brown, said, "Consumers are led to believe that the cheapest loan is the one with the lowest APR. But this is far from the truth - borrowers should be aware that a loan package does not always do what it says on the tin." Martin Coles, editor of Which?, said, "It's ludicrous that a card with a lower interest rate can cost more than one with a higher rate." Which? cite an example of borrowing