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Banks cave in

Daily Mail
11 July 2003

BANKS have buckled under intense pressure to clean up their act over hidden charges and rip-off practices on credit cards.

By the end of the year, credit card holders will be issued with US-style comparison boxes, giving clearly labelled information for the first time to millions.

People have been bombarded by the 1,300 credit cards on offer, which feature myriad rates, fees and complex terms and conditions, often buried in the small print.

But after a concerted campaign by influential MPs at the Treasury Select Committee and consumer groups to clean up the credit card industry, bank chiefs have finally backed down.

Today Apacs, which oversees all the banks' credit card transactions, will put forward plans for special 'consumer boxes' to be published with card statements. The special box would have to be provided by each firm on all of their cards clearly detailing, for example, interest rate charges, minimum monthly payments and various fees.

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• DEBORAH Whitsey (left), an infant school teacher from Kettering, Northamptonshire, has been using a Nationwide credit card for two years. She applied for the card soon after opening a bank account with the building society.

She transferred the balance from her old card because of the low interest rate. Miss Whitsey, who pays off her balance monthly, likes having easy-to-understand information about charges, interest-free periods and benefits. She says: 'I already receive a statement with the details on the back, which is very straightforward, plus I get other information in Nationwide's comparison box table. 'It's good news that other banks will have to adopt this as it will make it much easier to compare the differences between credit cards.'

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For years, card holders have been enticed with low introductory rates of interest, only to be hit with sky-high rates at the end of the deal. The higher standard rate will be the most prominent in the new 'consumer boxes'.

The banks should start to introduce the consumer boxes in the coming months, and this will be adopted in the Banking Code - a voluntary set of rules the banks sign up to - at a later date.

Apacs spokeswoman Sandra Quinn says: 'All the banks have agreed to this. We have been wanting to do this for a couple of years now. There are just a few things to iron out, such as how big the box will be and where exactly it will appear on statements.'

Apacs will now consult the Consumers' Association on the best design for the boxes, their size and where they will be placed on the statements.

Nationwide Building Society was the only firm to publicly champion the consumer box concept. Halifax this week followed suit by announcing it is introducing 'clarity boxes' during 2004.

A standard already exists in the U.S. called the 'Schumer box'. Credit card providers there are legally required to publish information in all marketing material.

But up until now, the only comparison tool in the UK was the annual percentage rate (APR), which often fails to reveal the full picture to the consumer.