March 1, 2006

The Office of Fair Trading has called for a change in the law with regard to the use of credit card cheques.

Credit card cheques are used by consumers, instead of their actual plastic credit card.

The Office of Fair Trading are concerned that many consumers are unaware of the higher charges and interest rates applied to the use of credit card cheques.

Many on offer arrive with attractive zero per cent deals on purchases, however, when someone uses a credit card cheque to make a purchase they often lose the zero per cent deal.

The Department of Trade and Industry have also asked for credit card companies and banks to make credit card cheque charges, interest rates and fees more apparent to consumers.

Recent research has shown that only a third of credit card cheque users are ware that interest is charged immediately to their account at the point of purchase, regardless of any zero per cent purchase deals. And more alarmingly more people are completely unaware of the interest rate they would be charged, which is always substantially more than the standard purchase rate.

The Office of Fair Trading have asked for consumers to be told clearly the following:

• When a purchase is made, when exactly interest is charged and whether their zero per cent deal is applied
• How credit card cheque usage is regard differently from the plastic credit card.
• Are credit card cheques treated as a cash advance
• What actual interest rate is applied. All credit card applications should include a summary box which should list all interest rates and charges, however, credit card cheques and cash advance rates should be highlighted more.
• Any additional charges or fees that could apply
• By using a credit card cheque is a consumer still protected the same way as a plastic credit card

When someone receives a credit card they also receive credit card cheques and it is with this in mind the Office for Fair Trading are very concerned.