Personal loan repayment transparency should be emulated in credit cards
Credit cards, which carry rates of interest that are atypically higher than average, should clearly demonstrate repayment examples as a means to protect borrowers from potential financial difficulties.
A leading debt management firm made the suggestion, in response to a number of recently launched cards, which carry typical APR’s in excess of 30%. The firm claims that sizeable numbers of borrowers who choose to use such cards, are unaware as to what a 30% typical APR could mean to them in repayment terms, with many running into serious monetary problems as a result of their decision.
Other forms of credit, such as personal loans, are required to display repayment examples in chart form, so that potential borrowers can quickly assess as to what effect their chosen loan product, will have on their financial position. However, in the case of credit cards, very few providers offer similar charts, the lack of which can often cause confusion amongst consumers.
A spokesperson for the debt management firm commented that almost 50% of their clients debt problems stemmed from credit cards, of which a further 20% blamed a lack of understanding with regards to the way in which interest is charged, as being their primary downfall.
Although the Ernst is always on the borrower to research any chosen credit product, providers still have a degree of responsibility towards consumers, with regards to product transparency.
