Spenders don’t know how credit cards work
Over half of Irish consumers own a credit card – but two-thirds of them don’t know what interest rate they pay, and over half of the population now believes that we’re more dependent on credit cards due to the COVID pandemic.
Those are among the findings in a new national survey carried out by the Irish League of Credit Unions (ILCU) into the spending habits of credit card users.
The results also show that there has been no improvement in consumer awareness of interest rates or spending habits when compared to previous ILCU surveys conducted in 2020 and 2019.
Because when asked about their awareness of the interest rate they paid on their credit card balance, 65% of respondents said that they did not know what interest rate they paid – an increase of 7% on the 2020 survey results.
Of those who responded that they are familiar with the credit card interest rate they pay, 26% think they pay between 11% and 17%, while 38% think they pay 18% to 24%.
One-fifth of these respondents believe they pay less than 5% in interest with over half believing they are paying less than 10%.
Overall, the survey highlighted a significant lack of understanding on how interest is applied with 36% of respondents incorrectly stating that they “don’t pay any interest” if they cover the minimum balance due at the end of each month.