FOOL'S EYE VIEW
Get A Better Deal - Please!

By Jane Mack (TMFJane)
July 12, 2002

Do you realise is just over thirty-five years since the first credit card was born in the UK? I was only about six at the time so I haven't a clue what people used to do before then. What I do know is that there are now more than 1,500 of the damn things to choose from.

More interestingly, can you remember what interest rate you were paying on your credit card even five years ago? If so, is it a better rate now?

A survey released earlier this week has revealed that almost 90% of consumers don't think credit cards offer more value for money than they did in 1997 and yet, strangely enough, some of them do. We're just not taking advantage of it.

According to the credit card company, Accucard, almost half of all consumers (42 per cent) believe not one single financial product has have improved over the past five years, with pensions, bank accounts and insurance arousing the least enthusiasm. (Well, let's face it, they are pretty boring). 

Consumers don't see any real difference between old and the new financial products and this makes them less inclined to switch to other providers. Accucard say it's not just that people don't realise there are better products on the market, it's also a reflection of the scepticism we feel at the 'barrage of gimmicky products' thrown at us all the time.  

For example, only 6 per cent of those asked thought savings or current accounts have changed for the better. Now, forgive me for using some of our own advertisers to make the point but every single one of the banks currently advertising in our Banking Centre pays a fairly respectable interest rate on current accounts in credit – one of them as much as 3.5%. If you bank with one of the Big Four you're probably getting a measly 0.01% or thereabouts. Unfortunately most of us bank with the four main banks and we just can't be bothered to switch.

The survey shows that only 12% thought credits cards had changed for the better over the last five years. Again, I don't want to labour the point but if you look in our Credit Card Centre you'll see that MBNA and Marbles are both offering a nil per cent interest rate for six months on balance transfers. I don't remember that sort of deal being around five years ago. And I certainly don't understand why people who don't or can't pay off their credit card in full every month are happy to pay rates that are nearly hitting 20% when they could do so much better for themselves with a little research.

Actually maybe people aren't aware of the rate they're paying. My husband and I have just examined his latest credit card statement and nowhere does it say what the interest charge is. We rang up – the APR is a humungous 19.9% so it's a good job he's currently 12 pence in credit! He always pays his bill off in full every month anyway but he was still a bit stunned that the rate was so high.

As Accucard's Martin White points out:

"There are much-improved products available, but they are often lost in a sea of mediocre offerings from complacent companies. People want flexibility, choice and good value, but traditional companies simply aren't offering this."

I suspect there's a great deal of laziness on our part too. Financial products and services have improved no end over the past 5 years, yet through inertia and lack of knowledge, most people don't realise they could be getting a much better deal elsewhere. You're not one of them I hope!

More:  Credit Card Centre | Banking Centre