Making a realistic credit card comparison is almost impossible, consumer group Which? has claimed.
The group said that banks are able to disguise their charges to such an extent that consumers who compare credit card deals by the headline rate could find that a 13.9 per cent card is actually cheaper than an 11.8 per cent card.
“It’s ludicrous that a card with a lower interest rate can cost more than one with a higher rate,” Which? editor Malcolm Coles said in a statement.
“We want the credit card industry to use one standard way to charge interest so consumers really can choose the cheapest card.”
Which? pinpointed the time that credit card providers charge interest from as a key difference, with some giving consumers up to 56 days interest-free to pay off a purchase and some charging straight away.
Which? claimed that it had found no less than 14 different formulas for calculating interest used by the industry, with no way to tell which was used on a card when making an application.
“Different cards have different uses and if you try and use a one-card-fits-all solution you’ll get shafted,” claimed finance advisor Martin Lewis to Reuters.
Mr Lewis said the only way to “win” against the credit card companies is to use a “precision plastic” method of selection on the basis of using the right card for the right purpose.
While credit card providers are now required to print summary boxes detailing charges on every statement, borrowers are unable to get any such explanation before they have applied for a card.
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