Customer confusion over credit card rates

More than three quarters of credit card holders do not know what rate of interest they are paying, according to a report from the Office of Fair Trading published today.

The research showed that more than 70% of adults had a credit card, and 37% had at least two. The majority (60%) of people believed they had a good grasp on how credit cards work, but most could not answer specific questions, or give important information, about their card.

According to the report, one in five people who do not pay the full balance of their card off each month has a balance of ?1,000 or more, and most consumers are not equipped with the knowledge necessary to make sure they are getting the best deal. Indeed, the research showed that many credit card holders simply opt for a brand they know and choose the card offered by their own bank.

John Vickers, chairman of the OFT, said: "Consumers need key information presented in a way that is easy to understand to make good choices about credit cards."

The research comes ahead of the publication on Thursday of the watchdog's study into the supply of store card services.