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