Credit card providers confusing customers and making more money
Credit card providers in the UK have been accused of confusing customers with technical financial jargon and making millions of pounds in extra profits as a result of this.
The Office of Fair Trading has stated that credit card companies are pulling in an extra £400 million a year as the result of consumers paying more than they should after getting confused with the jargon that card companies use in their small print.
The Office of Fair Trading is now putting into place a process that should stop consumers from getting confused and paying over the odds for their credit cards.
A number of steps are being taken by the watchdog to try and eliminate this problem. One of these steps is to make credit card companies use a summary box on marketing materials and statements using simple, easy to understand language that summarises the terms and conditions of the card.
The watchdog is also looking to place a ban on credit card companies using technical jargon in the small print, which is often skipped or misunderstood by consumers.
The OFT is also planning to set up a website that will allow consumers to compare credit cards that offer the best value for money based on their needs, circumstances, and repayment habits.
Officials from the OFY stated: ‘Providers can add to the problem knowing that consumers cannot process complex information. They can create “noise” by increasing the quantity and complexity of information which makes it difficult for consumers to see the real price.’
Many consumers do not spend time shopping around for the best card deals, and the OFT stated: ‘Most consumers are not choosing effectively between credit card products. If consumers did shop around for a card, they could make substantial savings.’
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