OFT Encourages Transparency in Credit Card Terms

by Gill Montia

Story link: OFT Encourages Transparency in Credit Card Terms

The Office of Fair Trading (OFT) wants to encourage credit card companies to be more transparent about their interest rate charges. Earlier this year Which?, the consumer group, asked the OFT to investigate the market after revealing that the top 20 providers charge interest in 12 different ways. In a survey of the market Which? found that quoted rates of APR could vary according to whether interest was being charged on interest. Interest-free periods also had to be taken into account and some companies charge interest from the transaction date rather than the point at which the transaction reaches the account. All these factors leave consumers in a position where it is very difficult to make a valid comparison.

The OFT is expected to begin a consultation with card issuers to improve transparency over APRs. It will consider how pricing information could be improved so that credit card users can make true comparisons. The Association of Payment Clearing Services, which represents credit card issuers, has pledged its support to the OFTs efforts to improve consumer choice. However, Which? is not impressed with the OFTs plans to negotiate with the credit card industry and has described its approach as “shy”.