Cheap credit cards deceiving customers

The top 20 credit cards use 12 different methods to calculate interest, meaning cheap credit cards could cost more than you would think.

Comparing credit card interest rates is seen as the best way to assess costs by half of credit card owners, research from Which? reveals, but APR (annual percentage rate) interest rates could just be the start of the story.

Which? calculates people paying off the same amount of money on the same amount of 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.

"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, Which? principal economist.

"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."

And to try and ensure this issue is addressed, Which? has launched a complaint to the Office of Fair Trading (OFT).

The consumer watchdog is calling for all credit cards to have an unconditional interest-free period on new purchases and for daily interest calculation to become more transparent and easier for Britons to understand.

"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," Ms Kozakov said.

Myfinances.co.uk

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