Business

Most credit card users 'unaware of interest they pay' says CU survey

Respondents' answers ranged from less than 5 per cent to up to 24 per cent, and highlighted a significant lack of understanding on how interest is applied

THREE in five credit card users in Northern Ireland have no idea what interest they are paying on their credit card, according to findings in a survey by the Irish League of Credit Unions (ILCU) looking into their spending habits.

Respondents' answers ranged from less than 5 per cent to up to 24 per cent, and highlighted a significant lack of understanding on how interest is applied.

Some 26 per cent of respondents incorrectly stated that they “don’t pay any interest” if they cover the minimum balance due at the end of each month, with 29 per cent correctly stating they know they pay interest on the full balance as well as interest on the outstanding balance from the date of the transaction.

The study also pointed how reliant many people are on their credit cards for everyday purchases - and how dependent they've become on their cards during the pandemic.

ILCU head of communications Paul Bailey said: “This survey highlights that consumer awareness around credit card interest and how that interest is applied is worryingly poor. With over two thirds of consumers in Northern Ireland owning credit cards, it is concerning that 61 per cent of these are unaware of the interest rate they pay.”

“With nearly half of respondents believing that credit card companies aren’t doing enough to clearly explain credit card terms and conditions to consumers, this is worrying given the high usage and over reliance on credit cards among the Northern Irish population.”

He added: “I would encourage the public to arm themselves with as much information as possible when it comes to financial products and services to make sure they are making the right financial decisions to suit their individual circumstances.

“At the credit union, we aim to provide members with the necessary financial education to support them in managing their financial wellbeing.”

Enjoy reading the Irish News?

Subscribe now to get full access

Business