Consumers find it difficult to compare different credit card deals because of their complexity. The Office of Fair Trading (OFT) said that people need better and more accessible information about the different charges on credit cards so that they are in a position to choose the offering that best suits them. The OFT carried out research following a complaint by consumer group Which? The research found that seven out of ten credit card holders had not compared various deals to find out which suited them. The OFT said: “The consumer is faced with a less-than-straightforward choice due to the number and complexity of the products.” The original Which? complaint had highlighted the various methods that card providers employ to work out interest charges. The variety of methods undermined APR as a way of assessing the value of a deal because it is possible for the same APR to cost different consumers different amounts in interest. Although the OFT decided against a standardised calculation method, it did put forward a series of recommendations to make it easier for consumers to choose credit cards. The recommendations include: the introduction of an independent credit card price comparison website run by the FSA; improvements in how information is presented in credit card issuers’ summary boxes; the standardisation of terminology used by credit card issuers in their product literature; and improvements to consumer education about the benefits of shopping around for a credit card. John Fingleton, the OFT’s chief executive, said: “No one wants to throw money away, but consumers who don’t shop around for credit cards are doing just that. “It is essential that consumers are given the right tools to make comparisons between credit cards more easily, and we can achieve this through some of the recommendations announced, which have received widespread support from the FSA, Apacs and the rest of the financial sector.” Sandra Quinn, of the Association of Payment Clearing Services (Apacs), welcomed the report: “We are backing the OFT in hoping that these proposals will spur customers on to make better decisions, by building upon the work already undertaken by the industry to make credit card products more transparent.” Date:13 February 2008
Content by: Companies Made Simple
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