/ Money

Have you been caught out by your credit card?

Figure leaning on credit card

With some 56 million credit cards in issue in the UK – that’s 70% of all European credit cards – it’s fair to say we Brits are pretty attached to our plastic. But is the industry serving us as well as it should be?

That’s what the Financial Conduct Authority (FCA) will be asking as part of its investigation into the £150bn credit card market.

Compared with some high-cost credit options, credit cards might seem pretty innocuous. But they’re not without their problems. In fact, in his speech last week, FCA chief executive Martin Wheatley referred to cards with low limits and high APRs as ‘payday loans with plastic’.

Focus on customers in financial difficulty

With nine million people considered to be in serious debt, the FCA has said its investigation will pay particular attention to how lenders treat those in ‘the most vulnerable circumstances’.

The regulator also highlighted the problem of ‘at risk’ households owning multiple cards and revolving multiples balances month by month.

Our research found that 44% of borrowers don’t repay their credit card balance in full every month – this includes 12% who only pay the minimum, which of course means it takes much longer to clear the debt.

Credit card catches

No matter what your financial circumstances are, too many credit cards appear to be designed to catch customers out.

When you apply for a card, for example, it’s reasonable to assume that you’ll be offered the advertised APR if accepted. But only 51% of successful applicants need to be offered this rate. We think lenders should make it clearer that some customers will be offered a higher rate than advertised.

We also think it should be easier for customers to compare different credit card deals. For example, it’s unlikely you’d know that a 0% balance transfer deal with a fee of 4.9% paid off over six months is the same as a typical credit card APR of 17.9%.

We’d like to see the FCA investigating how lenders can help put people in control by providing clearer information, stopping excessive penalties and encouraging people to shop around without it damaging their credit rating.

Have you been caught out by your credit card? What would you like the FCA to look into as part of its investigation?


I’m never in debt, use just ONE card for purchases
paid in full each month, but I’m a careful spender
unlike some people that are less frugal with their
liabilities having multiple cards for whatever

I do not live beyond my means.


I would recommend having two cards which are paid off in full each month. Then, you have the convenience of not carrying much cash without the risk of embarassment if one of your cards is blocked for any reason (eg suspected fraud by a third party), particularly if you are not in a position to spend lengthy periods on a phone to the card provider while you establish the cause of the block, and possibly await delivery of a new card. This is particularly the case if you use a credit card when abroad.


It happened to me once causing some degree of embarrassment
at checkout…. demanded recompense that lender paid up in full
w/out any questions… for their own stupid idiotic mistake!!


Always carry enough cash just in case….


I pay my credit cards by direct debit, so there is no danger of paying extortionate interest charges, assuming that there are funds in my current account.

I would like to see customers and not the banks setting the credit limit on cards and having to request that this limit is raised if necessary.


I was only caught out twice by my credit card. The first time, I did not receive the bill in the post, and I asked Lloyds TSB to refund the interest because I had always paid in full for 30 years. On the second occasion, I forgot to settle the bill because I was seriously ill, and I was horrified by the interest. That’s when I switched to paying by direct debt.


To the extent payments are made in full each month, it makes good
sense to set up ‘direct debit’ even when had multiple
cards but no longer… the responsible lender will
usually set a high credit limit to the extent income shall
allow…. but will adjust it correspondingly downwards when
spending patterns dictate otherwise… the credit card user
must be in full total control of his finances in any event.


I use a credit card for convenience – not for getting into debt. It saves carrying too much cash and at the end of the month gives me a tally of my spending, which I then pay off in full. It seems to me we regard debt as a right – and credit as a means of buying things we cannot currently afford – or may not buy if we thought harder about it and had to fork out hard-earned cash. How to promote a culture of saving to buy might be a better use of time than promoting easier credit – that only serves to get the “vulnerable” into more debt.
The trouble is, reducing credit quickly will damage the economy we have gradually created that depends on spending money we don’t immediately possess.

Rico says:
10 April 2014

APRs should be capped and not doubled overnight.

CLEAR warnings should be given on significant changes such as bringing forward the due date or reducing the limit (Both techniques to induce charges)