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Watchdog to launch credit card comparison site
via Reuters :
By Jennifer Hill
LONDON (Reuters) - City watchdog the Financial Services Authority is to launch an independent Web site to help consumers compare credit cards.
The move follows recommendations by the Office of Fair Trading (OFT) designed to help consumers get a better credit card deal.
Others will include improvements in summary boxes on credit card marketing materials and statements, standardisation of terminology used in product literature and greater consumer education on the benefits of shopping around for a credit card.
The OFT report into credit card comparisons follows a super-complaint from consumer group Which? in April last year.
Which? said people choose credit cards without understanding all the issues that affect the cost of the card, and OFT research later showed that 70 percent of credit card holders do not shop around.
John Fingleton, chief executive of the OFT, said: "No one wants to throw money away, but consumers who don't shop around for credit cards are doing just that.
"It is essential that consumers are given the right tools to make comparisons between credit cards more easily, and we can achieve this through some of the recommendations announced today which have received widespread support."
Payments body Apacs said the new comparison Web site would prove an important additional tool to help people make informed choices about the card that best suits their needs.
Director of communications Sandra Quinn said: "We are backing the OFT in hoping that these proposals will spur customers on to make better decisions by building upon the work already undertaken by the industry to make credit card products more transparent."
The OFT's recommendations follow its research into the comparative costs of using different credit cards for purchases, cash advances, introductory offers and payment allocation.
Many credit cards allocate payments first to outstanding balances at the lowest rate of interest (for example 0 percent balance transfers), leaving balances charged at higher interest rates, such as purchases and cash advances, to accrue interest.
Jeremy Wood, director for banking and credit cards at Nationwide, one of the few providers to apply payments to the most expensive debt first, said: "For too long many credit card providers have got away with applying an adverse order of payments to their customers and we hope this new comparison site will address this sharp practice."