Most credit card users don’t know their interest rate

“Lack of real knowledge” of how interest is applied also highlighted in credit union study

The study, which was commissioned by the Irish League of Credit Unions (Ilcu) and carried out by i-Reach Insights, involved 1,000 adults across the State.  Photograph: iStock

The study, which was commissioned by the Irish League of Credit Unions (Ilcu) and carried out by i-Reach Insights, involved 1,000 adults across the State. Photograph: iStock

 

Six in 10 credit card users don’t know what interest rate they pay, according to a new survey. Slightly more, seven in 10, agree that adults in Ireland rely too much on their credit cards for making purchases.

The study, which was commissioned by the Irish League of Credit Unions (Ilcu) and carried out by i-Reach Insights, involved 1,000 adults across the State.

More than half (57 per cent) said they owned a credit card themselves.

More than two-thirds of women (68 per cent) did not know what interest rate they paid, compared to 51 per cent of men.

Of those who said they did not know the interest rate they are paying, almost one-third (31 per cent) estimated they paid between 18 and 24 per cent interest. A quarter said they paid between 11 and 17 per cent, while one-fifth said they only paid between 6 and 10 per cent.

Irish market

The Ilcu said credit card interest typically ranges between 13 and 23 per cent in the Irish market. It also said there appeared to be a “lack of real knowledge” of how interest was applied.

For example, when those who said they knew what interest rate they paid were asked to estimate how much they paid if they cleared their minimum monthly payment due, four in 10 incorrectly said they didn’t pay any interest.

Less than a third (29 per cent) correctly said they paid interest on the full balance from date of transaction to date of payment, as well as interest on the outstanding balance. More than 10 per cent said they had no idea how much interest they would pay after clearing the minimum due.

Almost three-quarters (72 per cent) of all respondents said they did not believe credit card companies in Ireland did enough to explain the interest rates.