You are here: Home - Credit Cards & Loans -

Credit card cheques could result in financial hangover

0
Written by:
19/11/2007

Consumers were bombarded by 313 million unwanted credit card cheques last year, according to uSwitch.
Research by the comparison and switching service has found that, a year on from a Department of Trade and Industry (DTI) investigation into credit card cheques, 96 per cent are still sent out unsolicited by providers. The investigation conclusions stipulated that credit card providers must display a summary box containing the purpose, key features and charges of credit card cheques.

However, uSwitch is still concerned about the unsolicited distribution of cheques, the lack of consumer knowledge of the costs and the checks undertaken by providers as to a customer’s suitability. It found that 22.5 million consumers (50%) have been sent credit card cheques, but just 1 in 50 asked for them. Using them has cost consumers £298 million more in interest and charges than a standard credit card purchase.

In addition, 2.1 million credit card holders think no charges apply to credit card cheques, according to uSwitch, but standard interest rates are actually 76 per cent higher than for normal card purchases and the average handling charge is 2.81 per cent.

Mike Naylor, personal finance expert at uSwitch.com, said: “Unsolicited credit card cheque mailings raise the big question about card providers’ commitment to responsible lending. In 2006, the Office of Fair Trading (OFT) suggested that the practice of issuing unsolicited credit card cheques should be banned, but this was never implemented. In fact, the DTI ruled out the option, and instead imposed an ‘opt-out’ [for consumers].

“No matter how convenient they appear, it is one of the most expensive ways to get your hands on cash – with interest rates on average 76% higher than standard rates. Using a credit card cheque as a quick fix solution could turn into a serious financial hangover.”

Tagged:

Tag Box

Debt

Pension

Spending

Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
State pension insufficient, say baby boomers

A massive 84% of consumers in their 50s and 60s think that the State pension is insufficient to live on...

Close