Business cards > Judging The Hidden Costs Of Credit Cards

Judging The Hidden Costs Of Credit Cards

by: Michael Hanna

Recent reports from CreditAction and the National Debtline appear to show that UK consumers are becoming more financially aware and are looking to reduce their levels of personal debt which have spiraled seemingly out of control over the past few years.

Despite the industry wide introduction last year of the "honesty box" in all credit card statements designed to outline the costs of loans and any additional charges, it seems that the activities of some of the financial services, especially certain credit card companies are misleading consumers and making it difficult to determine the true costs of many financial products.

The consumer group Which? (www.which.co.uk) has launched an attack against the interest rates quoted by credit card companies.
The problem revolves around the fact that there are around 20 different methods used by lenders to calculate interest charges and these make it extremely difficult for consumers to determine which credit card is cheapest, and have a huge impact on the amount that is ultimately repayable.
Which? states that, ?if you had two cards with the same interest rate and used them in exactly the same way, one could end up costing over twice as much as the other just because it calculated your interest differently.?

Moneynet (www.moneynet.co.uk) chief executive, Richard Brown, said, ?Consumers are led to believe that the cheapest loan is the one with the lowest APR.
But this is far from the truth ? borrowers should be aware that a loan package does not always do what it says on the tin.?

Martin Coles, editor of Which?, said, "It's ludicrous that a card with a lower interest rate can cost more than one with a higher rate."

Which? cite an example of borrowing ?2,800 over a year and then paying in full every four months.
With a Cahoot credit card, that has an interest rate of 11.8%, the cost would be ?40, while borrowing through HSBC at 13.9% would cost ?38 despite the higher interest rate.

Moneynet provide an even starker example.
A ?7000 loan over five years including PPI, taken out from the RAC at 6.5% when compared with the same loan at 6.7% from the Nationwide could lead to an additional expense of ?1,846 over the term of the agreement, despite the RAC having a lower headline rate.

The reason for the problems is that the APR generally used to compare products is simply a measure of the cost of the credit, whilst not taking into account other factors such as add ons like payment protection insurance (PPI), early repayment penalties, or when the card company actually starts and stops charging interest.

Richard Brown states, ?This enables them to advertise what looks like a competitive rate to attract customers.
Then once the applicant is convinced they have found a great deal, the commission-hungry provider will make every attempt to sell them PPI, thus increasing their margin via the back door.?

The Office of Fair Trading is currently investigating the fees charged by two of the biggest credit card providers, which it claims mean that consumers ultimately pay more for the goods they buy.

Which? has requested that
the credit card industry uses one standard way to charge interest so consumers really can choose the cheapest card.
However until this happens and a more transparent means of comparing credit cards is implemented across the board, consumers are urged to look beyond the attention grabbing APR and ensure they get all the facts prior to taking out any financial agreement.

Disclaimer: All information contained in this article, is for general information purposes only and should not be construed as advice under the Financial Services Act 1986.

You are strongly advised to take appropriate professional and legal advice before entering into any binding contracts. Useful resources: Moneynet financial comparisons ( http://www.moneynet.co.uk ) Which? consumer advice ( http://www.which.co.uk )

About The Author

Michael Hanna is a keen writer, and internet marketer living in Scotland:

Contact details:

E-mail: samqam@googlemail.com

Phone: 0131 561 2251

Michael's Website: http://www.gransha-taxi.co.uk

What Should You Do When Designing A Business Card Online

What Should You Do When Designing A Business Card Online

by: Florie Lyn Masarate

Designing a business card online is not any different from designing one offline. There are a lot of factors to consider to ensure that your business card will serve the purpose that it is intended in the first place.

When designing a business card online you should:

1. Try to design the business card yourself. Nothing like avoiding the charges you have to pay when hiring designers to do the job. Besides, you are your own boss. Nobody will tell or criticize you on what you want attained.

2. Use shadows on texts so that when you use light texts, it will be easier to see even though the background is also light. You would not want your readers squinting their eyes out just to see what is written in your cards.

3. Go for bulks. Did you know that having more quantities printed can save you a lot in printing costs? Many people do not know that by...

What Should You Do When Designing A Business Card Online

Business cards > What Should You Do When Designing A Business Card Online

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By applying for the correct amount, students won?t find themselves in a bind or get themselves into a credit card nightmare.

Way too many college students these days get into big trouble with credit cards. It?s unfortunate that students too inexperienced to know better receive enticing credit card offers in the mail. Usually when a credit card offer looms over a student, it?s like dangling a carrot in front of a rabbit. The student grabs the credit card offer without thinking ahead. Credit cards oftentimes appear to be a quick fix...

Are Student Loans Better Than Credit Cards?

Business cards > Are Student Loans Better Than Credit Cards?