Be choosy on credit, warns OFT

The Office of Fair Trading today launched a campaign urging consumers to shop around when choosing a credit deal.

A survey conducted by the OFT showed that a third of people had borrowed money without comparing deals and more than a third of 18 to 24-year-olds had taken out credit while shopping when they hadn't intended to before setting out.

The OFT said its survey found that one in five people have signed a credit agreement they later regretted, while just under a third of people had felt pressurised to take up credit. And, worryingly, the majority of people asked said that they do not always read all of the small print before signing.

The singer Kym Marsh launched the campaign, aimed at young adults, which sets out 10 key questions for consumers to ask themselves before signing up for credit.

The OFT chairman, John Vickers, said: "By asking themselves our key questions, people will be able to make a more informed decision on what credit deal best suits them. Credit is not an add-on to a major purchase, it is a major purchase on its own - and a wrong decision can lead to long term grief."

The 10 questions to ask are:

* How much will the credit cost you compared with other similar deals?

· Is your home being used as security?

· Is it the best deal and interest rate you can get?

· Do you fully understand the credit agreement form you are about to sign?

· Will the interest rate stay the same?

· Are there extra charges if you repay the debt early?

· What happens if you miss a payment?

· What do you have to pay each month and for how long?

· What's the total amount that you will pay back?

· Can you take the credit agreement away to consider at your leisure?