Choice Says Credit Card Companies Treating Borrowers Unfairly

Post by Sharat on January 25, 2010 · Under Personal Finance, banking, credit cards · Comment 

Consumer advocate group Choice says that credit card companies are hiding details on interest charged to partly paid or overdue credit card balances, and this is costing consumers unfairly.

Choice studied 20 credit card companies, and found that the level of interest charged on credit cards can depend on when the issuer starts and stops charging interests, whether they honour the interest free period advertised, along with the rate.

“Many consumers would be surprised to learn they could have two cards with exactly the same interest rate and use them in the same way yet have one charging twice as much interest than the other if they pay late. The tricks of the trade make it much harder to compare the relative merits of different credit cards because the headline interest rate is only part of the story.” Choice spokesman Christopher Azine said.

Many issuers will backdate their interest to the date of a purchase if the borrowers is late with their repayment. This means a borrower who is just a single day late with their payment could incur up to 55 days of additional interest being levied.

The consumer advocacy group says that borrowers who partially make payments will still face backdating of charges.

For example if a customer were to underpay a $2000 bill by just $10, the extra interest would still be charged on the whole $2000.

Mr Azine called for borrowers to be aware of the fine print of their credit card deals and for all issuers to use the same charging methods.

“It’s a simple matter to tweak systems to employ fairer systems but while most customers don’t understand the tricks they will inevitably continue,” he said

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