Credit Card News Watchdog Calls For Clarity On Credit Card Cheques 17058178

Watchdog calls for clarity on credit card cheques

02 March 2006
The Office of Fair Trading (OFT) has warned that consumers could be paying as much as £57 million a year in interest charges and fees when using credit card cheques.

The watchdog therefore wants to see legislation introduced making it compulsory for people to receive adequate information from lenders about the costs.

Credit card cheques can be used to pay for goods using funds from a credit card account in the form of a cheque

However, this form of payment often comes with a higher interest rate than the credit card itself.

Additionally the cheques are not extended the same interest free period that often comes with a credit card.

Finally, the OFT adds there is often a fee to pay for the cheque to be processed, typically two per cent of the purchase value.

The OFT feels that consumers may be paying these extra charges without realising, and is calling for consistent and regular information to be made available.

It also agrees with other consumer groups that have argued people should only receive credit card cheques from lenders if they ask for them.

John Fingleton, chief executive, said: “Consumers need good quality information about the costs and other potential disadvantages of credit card cheques before they consider
using them.

“This isn’t always happening and we urge the government to introduce legislation to protect consumers.”

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Written by Editorial Team