Millions of credit card holders face a New Year financial hangover because they aren’t clued up about their credit card, new insight from MoneySuperMarket, The research found two thirds (64 per cent) of credit card holders don’t keep a close eye on how much they spend on credit and only check their statement at least once a month. Another two thirds (66 per cent) have not checked their credit score in the past year, with a fifth (21 per cent) not knowing how to do so. Meanwhile more than one in ten (13 per cent) credit card holders have no idea how much interest they pay on their credit card.
When last signing up for a credit card, a worrying number of consumers did not understand some of the key terms associated with it. Almost a third (30 per cent) had a limited or poor understanding of purchase credit cards and a fifth did not know exactly what a balance transfer card (22 per cent), reward credit card (22 per cent) or cashback credit card (20 per cent) was. Furthermore, 12 per cent had limited or poor knowledge of the term ‘interest free period’, and 10 per cent did not fully understand the term ‘minimum monthly repayment’.
Kevin Mountford, banking expert at MoneySuperMarket, said “With almost two-fifths (39 per cent) of credit card holders owning more than one card, and many admitting they don’t truly understand the terms and conditions, it’s easy to see how debt could spiral out of control. Many people will use their credit card at this time of year which, if used wisely, can help spread out the cost of big purchases, offer protection on purchases and help improve your credit score. However, if used badly you could incur unnecessary charges, end up in debt and damage your financial reputation – making it harder to get credit in the future. It’s worth taking the time to get to grips with your credit card so you avoid a financial hangover in January.”