The UK Card Association has launched www.cardcosts.org.uk, following research in conjunction with the Personal Finance Research Centre which revealed consumers are struggling with the ‘APR’ as the traditional measure of illustrating the cost of borrowing. 

The CardCosts website will allow credit cardholders to:

・ Gain a better understanding of the cost of their current repayment choices;
・ Experiment with different levels of payments and desired periods to pay off a balance;
・ Learn from a range of informative messages which explain what can be complicated terms;
・ Link to other help and guidance, such as credit card statements and summary boxes; and
・ Quickly receive details of sources of free independent debt advice.

The UK Card Association said the website looks to go further than other similar existing tools by capturing details of different types of balance, covering not only traditional card purchases, but also balance transfers and cash advances.

The website will show the user the impact of paying just a little more than the minimum payment.

Sponsored

Wellness and wellbeing holidays: Travel insurance is essential for your peace of mind

Out of the pandemic lockdowns, there’s a greater emphasis on wellbeing and wellness, with

Sponsored by Post Office

Andrea Finney from the Personal Finance Research Centre, said: “One of the most striking findings to come out of our research was how strongly the people we spoke to wanted to understand the costs of their credit card in relation to their own spending.

“A hypothetical balance, such as the one used for calculating the APR, simply wasn’t meaningful. This new website was developed to give users the opportunity to see the cost of their cards as a direct reflection of their actual balance and how they use their card.

“The way that credit card costs are calculated and applied can be complicated enough, but when you add in the potential different combinations of types of balance and the many different approaches consumers can take to repay their cards, the picture becomes even more complex.

“It’s extremely difficult for consumers to navigate this complexity on their own. The key challenge in developing a tool like this therefore lay in stripping back this real-world complexity to make the interface as simple and intuitive to use as possible, while retaining the validity and representativeness of the results.”

Credit rating information provider, Equifax, recommends that anyone planning to apply for a new credit card obtains a copy of their credit report before making any applications.

They will be able to see exactly what a lender will see and can take steps to ensure they are in the best position to get the best deal.