Do you know how much credit card interest you pay? Most people have no idea

Only one-third are aware of high levels of interest charged with some thinking they pay little or none

Most Irish credit card holders vastly underestimate the rates of interest charged on outstanding balances, according to new research published by the Irish League of Credit Unions (ILCU).

The online survey of 1,000 adults, carried out by independent research company iReach Insights last month, also suggests that there has been no increase in recent years in the understanding of how credit cards work and how they can be used effectively.

According to the ILCU research, 51 per cent of Irish adults own at least one credit card with most of the spending used to cover ad-hoc purchases each month and 12 per cent of spending going toward holiday and flight bookings.

Credit card gif

The survey suggests that while 65 per cent of credit card holders clear the balances in full each month and avoid potentially punitive interest rate charges as a result, almost one-in-five (18 per cent) only make the minimum payment each month while 9 per cent are frequently unable to cover the minimum charge.


Two-thirds of respondents admitted that they did not know how much interest they pay on their credit cards, with 24 per cent believing they are charged 5 per cent or less interest by their bank or credit card provider.

Some 34 per cent believe they don’t pay any interest if they cover the minimum balance every month, a misapprehension that could be costing many card holders dearly.

According to comparison data from the Competition and Consumer Protection Commission, the rates charged by credit card providers in Ireland range from just under 14 per cent at the lower end of the scale to as much as 26.6 per cent at the very top of the range.

“The results of this year’s survey are worrying, especially amid the cost-of-living crisis that we are currently going through,” said ILCU spokesman Paul Bailey. “The fact that more than half of those surveyed don’t have a true understanding of how credit cards work is a concern, particularly given the number of people who use their credit cards for monthly ad-hoc purchases.”

He said that all credit card companies “have a duty to make sure that their customers understand the product they are offering” and suggested that people research the full suite of charges and rates imposed by various providers before applying for a card.

Mr Bailey said it was troubling that things “don’t seem to be getting any better and there has been no improvement in people’s understanding of how credit cards work in recent years”.

“That points to a lack of financial education and that probably goes all the way back to our school system while credit card providers don’t do enough to educate their customers and there is a lot of fine print that is very difficult for many people to understand,” he said.

Addressing those who believe they will not be charged interest once they meet minimum repayments each month – repayments frequently set at a tiny percentage of the balance – Mr Bailey noted that “by paying the minimum, people think they are not paying interest but all the time they are accumulating interest on the outstanding balance and on new purchases and it is very important that people understand that”.

Conor Pope

Conor Pope

Conor Pope is Consumer Affairs Correspondent, Pricewatch Editor and cohost of the In the News podcast