The nation’s 31 million credit card holders should find it easier to compare credit card accounts and make a decision on whether to switch, once a new type of statement lands on their doormat.
All annual statements now contain the same information which will help credit card holders compare and contrast with different providers.
The new credit card statement will specify the time period covered, include total spending, the amount repaid and any interest fees and charges incurred while giving a breakdown of point-of-sale spending, cash advances, balance transfers, and the applicable interest fees and charges for each type of transaction. Information will also be provided on charges for foreign transactions.
Credit card annual statements have plenty of potential
Which? expert Martyn Saville said: ‘Annual statements have the potential to help consumers to keep track of their spending and borrowing. You’ll be able to see at-a-glance whether the amount you’re borrowing has gone up or down over the year, as well as how much you’ve been charged in interest and fees. Holding this information will hopefully encourage more people to switch away from poor value products and pay off their debts more cheaply and more quickly.
‘Annual statements are to be welcomed as a key tool in empowering individuals. Their practical value, though, will revolve around the usability of the document – if it’s steeped in jargon or poorly structured, card providers will have missed an opportunity to engage with their customers and to offer them true added value.’
Some credit card companies have already started sending out the new statements, developed by The UK Cards Association in partnership with the Department for Business, Innovation and Skills, but customers who have yet to receive one, should on the anniversary of when the account was opened. The industry will review the effectiveness of annual statements with consumers and their impact on behaviour over the next year.
Creating a fairer credit card system
The new annual credit card statement comes after the credit card industry introduced a wide range of rules at the beginning of January 2011 which gave customers greater control over their credit limits, the interest rates they pay as well as enabling them to clear outstanding debts quicker and in a fairer manner.
Lenders also have to tell consumers about any increases to limits on their credit and store cards at least 30 days before they happen and if banks want to increase interest rates existing customers are being charged on debts, they must give individuals 60 days to accept or reject them.