Different methods of calculating interest means that a low APR figure does not always equate to low repayment rates, despite more than half of those facing credit card debt believing this to be the case, Which suggests.
And in an effort to bring a greater degree of transparency to the process of selecting a credit card package, the consumer watchdog has written to the Office of Fair Trading (OFT) urging it to take steps to “standardise interest calculation methods”.
“Two people who have two different credit cards with the same APR and who use their credit card in the same way, could be paying very different levels of interest,” principal economist at Which? Alena Kozakova made clear.
“Consumers have to be able to make meaningful comparisons on the basis of APR.”
The OFT recently outlined its plans to investigate the issue of banking charges and pricing amid rising debt management problems nationwide.