MONEY COMMENT
Britain's Most Expensive Credit Cards

By Cliff D'Arcy
July 21, 2003

In a recent article, we commented on the grilling that MPs gave credit card bosses. MPs roasted these companies for continuing to charge sky-high interest rates when, at 3.5%, the base rate is at a 48-year low.

As always, I turn to my trusty copy of Moneyfacts magazine to see which credit and store card companies are the UK's worst offenders. Here is the 'Roll of Dishonour':

Credit cards (interest rates shown are for purchases, not cash withdrawals)

These issuers all charge over 18% APR - over five times the base rate - on at least one card in their range:

Card issuer            APR
Barclaycard            24.9% (rates from 11.9% to 24.9%)
Bank of Ireland (NI)   22.4%
Household Bank         19.9% (issued by HFC Bank)
Northern Bank (NI)     19.9% 
First Trust Bank (NI)  19.9% (rates from 12.9% to 19.9%)
British Airways        19.9% (issued by American Express)
Laiki Bank             19.6% (UK arm of Greek Cypriot bank)
Alliance & Leicester   18.9% (MoneyBack cards)
American Express       18.9% (Amex Blue cards)
First Direct           18.9% (Classic VISA)
Morrisons              18.9% (issued by HSBC)
Ulster Bank (NI)       18.9%
Bank of Ireland (GB)   18.9%
Citibank               18.9% (Gold VISA)
Royal Bank of Scotland 18.3% (AAdvantage MasterCard)
Coutts & Co.           18.2% (the Queen's bank!)
Artscard               18.1% (charity donation card, issued by HSBC)
National Trust         18.1% (charity donation card, issued by HSBC)

Fools in Northern Ireland should spread the word - you're being ripped off by all the major NI banks! On the other hand, hats off to Cahoot (8% APR) and Intelligent Finance (8.9% APR) for having the lowest standard rates in the country, around 10% a year below the above rates.

Be warned: if you have credit cards and don't pay them off in full every time without fail, you're going to get absolutely clobbered by interest. Pay them off as quickly as you can, using balance transfers to 0% cards. If you can't control your spending, forget to pay your bills on time, or have problem debts, then stick to debit cards - it's far too expensive to borrow on plastic.

Store cards (interest rates shown are for payment other than by direct debit)

• The Comet Timecard (which can be used in several retailers, including Next, B&Q and Woolworths) charges a staggering 2.34% a month (31.9% APR). Almost ten times the base rate - unbelievable! In six weeks, you'll have paid interest of 3.51% - more than you'd pay in a whole year at the base rate.
• Creation account cards (covering thousands of outlets in the DUET network) charge 30.9% APR.
• Monsoon, Country Casuals, Kwik Fit, Laura Ashley and Russell & Bromley all charge 30.7% APR.

I could go on, but this 'Hall of Shame' is massive! To turn this exercise on its head, only three retailers charge under 25% APR (!):

• Marks & Spencer (LSE: MKS) - 18.9%
• Fortnum & Mason - 15.3%
• John Lewis and Waitrose - 6.5% APR for six months, standard rate 13% APR - the only honest store card around.

So, if you have store cards and don't always pay off your bills in full, then cut up your cards, pay off your accounts as quickly as you can, and never have one again. The promotional, marketing and loyalty gimmicks they offer are worth a fraction of the rip-off interest you pay.

More: Find a better Credit Card | Cunning Credit Card Conduct