Bank and Credit Card Interest Rates

  spuds 12:38 10 Apr 2007

This might be a puzzler for some people and perhaps not for others. Do you really understand how banks work out their interest rates, especially if you are likely to get in a overdraft position.

It would appear that the Office of Fair Trading and the FSA are conducting investigations on this matter. Apparently, depending on which bank or credit card provider that you use, your final outcome of interest rate charges can be quite different, even though the same ARP rates are used for the same period of most transactions. It would appear that depending on the time and day the providers work out their calculations, can make substantial differences to the final outcome of 'interest' charges.

Recently there was a television programme that did an investigation on bank charges and interest rates. One particular person/company was acting as a consultant(s) for quite a number of clients, and he/they was able to retrieve small and large amounts of money due to mis-calculation methods.

Have ever bothered to look into this, or just carried on regardless, because it became to complicated or that you trusted the banks and provider's!.

  Jak_1 12:42 10 Apr 2007

I always pay my visa bill whithin the time limit so have not had to pay interest charges. However working out apr's can get complicated!

  anskyber 13:02 10 Apr 2007

The Banks say the variations are designed to give consumers choice. It's a point of view, the choice may depend on whether there are for example interest free periods, cash advance interest rates and so on. In other words the Banks feel they are responding to competition for differing types of service and it's unfair to criticise genuine choice.

I see the point but I do not agree with it. At the end of the day it has a feel of a smokescreen about it and with the heavy reliance of comparative AER % very misleading.

Fine if you have several days and the inclination to do an Excel sheet (VoG where are you!?) the truth will be revealed but do you have that time, I do not.

  johndrew 14:38 10 Apr 2007

If the banks made it simple then more people would question the charges; much the same as other charges are currently being questioned. This would incur a level of demonstrable dissatisfaction from customers and cause the banks to spend some of their (not insignificant) profits in answering and correcting charges as necessary.

For the banks it is far better they hide (disgracefully) behind their claims of customer choice. After all those who pay are generally those who are less able to afford the charges and those less able to complain.

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