Personal Finance: Bid to Clear Credit Card Chaos

The Birmingham Post (England), July 12, 2003 | Go to article overview

Personal Finance: Bid to Clear Credit Card Chaos


Byline: John Cranage Personal Finance Editor

Customers need more information about credit cards to ensure that they get the best deal and do not face hidden charges.

That was the message from Nationwide Building Society chief executive Philip Williamson when he gave evidence this week to a Treasury Select Committee inquiry into credit cards.

Mr Williamson was one of a number of senior financial services industry figures to give evidence at the latest in a series of hearings.

Committee chairman Jim McFall accused company chiefs of allowing customers to 'tiptoe to disaster' and said they 'need their heads banged together'.

'I really think there needs to be a real shake up in this industry, you need to get your heads together, you need them banged together,' he said.

Attitudes in the industry seemed 'remarkably complacent' and were 'unbelievable', he added.

MPs alleged that the terms and conditions in the small print of credit card contracts were 'impossible to read' and they demanded to know why there were 11 different ways of calculating annual percentage rates -a challenge beyond most consumers.

They also wanted to know why credit card rates, such as Barclaycard's 17.9 per cent, were hugely in excess of base rate -which was cut to 3.5 per cent on Thursday, the day after the hearing.

Mr McFall asked the industry representatives to return in September with samples of sales literature setting out rates and charges in easily comparable format and with ways of simplifying terms.

Nationwide's Philip Williamson in turn challenged MPs to encourage the credit card industry to introduce the so-called 'consumer box' - an easy to read leaflet that clearly sets out all the charges that are normally hidden away in small print.

Nationwide is the first UK card issuer to introduce a consumer box, which is modelled on the Schumer Box which USA card providers are legally required to publish in all their marketing materials.

The consumer box compares and contrasts key factors such as rates of interest payable for the first six months, ongoing rates, APR on purchases, introductory benefits, card use benefits, fees for cash advances, annual fees, minimum monthly payments and late payment charges relating to all a company's products. …

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