The Office of Fair Trading (OFT) has again criticised card card issuers for making their products too complicated and hard to compare. The chief complaint was that the way a card’s APR was calculated was done in 12 different ways among the top 20 card providers, effectively making APR meaningless as a comparison point when choosing a new card.

While the APR is supposed to provide an easy way of seeing how expensive a card is to use, the plethora of different rates charged for different card usages, along with introductory rates and transaction fees, meant that a card with a higher APR could actually be cheaper to use than one with a lower one.

The OFT also looked at the allocation of payments systems of different cards, under which the most expensive debts take the longest to be cleared - something that isn’t always made clear.

While criticising card companies for using confusing language in describing how their products worked, the OFT also conceded that the issuers were legally obliged to present a large amount of regulatory text in their publicity materials, which in fact had the effect of making most customers ignore a lot of important information.

The OFT recommended that the presentation of credit card summary boxes be improved and simplified, that many terms used in product literature be standardised, and that consumers be better educated in the benefits of comparing credit cards carefully before making an application.

This entry was posted on Monday, February 11th, 2008 at 9:42 pm and is filed under General Credit Card News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.