Credit card interest charges 'confusing'

Credit card companies’ use of up to a dozen different ways of charging interest is earning them more money at the expense of confused customers, according to an industry watchdog.

Which?, a consumer group which has the powers to make a ’super-complaint’ that requires action by the Office of Fair Trading (OFT), has requested an investigation into how credit card companies calculate interest.

According to Which? the top 20 providers, who account for 90 per cent of the credit market, charge interest in 12 different ways, rendering comparisons using APR useless.

Alena Kazakova of Which? said: "People believe that APRs are a dependable way of comparing credit cards, but our research shows that APR cannot to be relied upon for true credit card comparisons."

Which? found that issues that affected interest paid included whether the account is in an interest free period, when interest on purchases starts accruing and whether interest is calculated until the statement is printed or the day before.

But the Association for Payment Clearing Services (Apacs) told the BBC that a uniform system of calculating interest would affect customers as not all customers want the same things from their credit cards.

A spokesman for Apacs told the BBC: "There are a huge variety of cards on the market and some people prefer to have a lower APR but pay earlier, others might like a slightly higher APR but only want to pay interest on the amount left outstanding."