OFT introduces bill to clearly show credit card charges

The Office of Fair Trading in the UK has introduced a new initiative that could make it much easier for consumers to find the best deals when it comes to credit cards.

The Office of Fair Trading plans to work alongside both credit card companies and campaign groups in order to try and make credit card costs and charges easier to understand, after recent controversy over confusion with regards to how consumers are charged with credit cards.

The consumer group Which? recently launched a complaint with regards to the confusion caused by credit cards, stating that consumers were often choosing credit cards that were inappropriate for them simply because they didn’t understand the costs associated with the cards. Following this complaint the Office of Fair Trading launched the programme to make these costs easier to interpret and understand by consumers.

The Chief Executive of the Office of Fair Trading stated: 'Credit card pricing has become increasingly complex, with many new dimensions such as interest-free periods. While these give additional choice and value to consumers, they can make it harder for consumers to make informed decisions. This work will consider how pricing information might be improved so as to enable better product comparison by consumers, without stifling valuable competition and innovation that benefits consumers.'

According to research carried out by the Office of Fair Trading many consumers still fail to compare credit cards before making a decision with regards to which card to take out.

Amongst the issues that will be tackled through this programme are the way that repayments are allocated on credit cards, the costs applied to cash transactions compared to purchases, and how introductory offers can affect the costs of credit card use.

Tom Smith
4th July 2007