You can find out what interest rate you’ll be charged on a credit card with a new online tool
EXPERIAN is set to launch a new online tool, which means you’ll be able to see the real interest rates that some credit card lenders are offering before you apply.
At the moment, credit card providers only have to give 51% of their customers the representative APR that they advertise.
The remaining 49% could be offered a higher rate, which they won’t find out until they’ve completed an application, according to the credit reference agency.
But with the new comparison service, Experian says users will be able to see the actual interest rate they will be charged before they apply.
The new price comparison feature, which will be free to use, is set to launch over the next couple of months.
Experian has said that customers should look for a “star” next to the price comparison results , which means they will be offered the advertised rate.
How to apply for a credit card
HERE's what to consider when applying for a credit card.
- Figure out what sort of card you need – There are several different types and each has its own benefits and downsides. Find the one that suits your needs best.
- Check your credit score – This will determine how reliable you are when it comes to borrowing money. The better your score, the more likely it is that banks will accept you for their best deals.
- Don’t apply for too many – If you get refused for an application it will leave a mark on your credit file, which other providers can see. Use tools, such as MoneySuperMarket’s Smart Search to check your eligibility.
- Don’t accept the first one – By law, credit card companies only have to offer 51% of their customers the interest rates they advertise. If you’re not happy with the interest rate you receive, you can always look around for a better deal.
When the tool launches, users will be able to see “real rates” for two major credit card providers – Virgin Money and Capital One.
Customers that are pre-approved for cards from Aqua, Marbles, MBNA and Barclaycard will also have access to the rates before they apply.
Experian has said it is in discussion with other credit card lenders to opt into its service.
Personal finance expert Andrew Hagger said: “It’s always been a bit of a lottery for customers when they apply for a credit card as they never know what interest rate they will be offered until the application process is complete and a mark left on their credit record.
“The representative APR quoted is only a rough guide and often bears little resemblance to the rate a customer is granted.”
Earlier this year it was revealed that Brits with hefty credit card balances are missing out on thousands of pounds by not switching their debt to a balance transfer card.
We have also rounded up the best 0% interest-free credit cards which stretch up to 31 months – these can be a great way of spreading the cost of big purchases over a long period of time.
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