Capital One UK has launched a new campaign as part of its ongoing efforts to make credit clearer, using transparent billboards to highlight a lack of transparency around APR repricing.
According to the credit card provider, under the law, they only need to offer the representative APR to 51% of applicants. This means that the remaining 49% might receive a different, potentially higher, rate when they obtain the credit product.
As a result, UK consumers receive higher rates than they anticipated when applying for credit, as the price and terms are not fully transparent before application.
Data from Capital One UK’s research revealed that over 1 in 10 adults (11%) have applied for a credit card and then ended up with a higher interest rate, on average 14.9% more than the representative APR they applied for.
This translates into a cardholder with a balance of £1,500 over 12 months paying an extra £223.50 interest.
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Whilst this isn’t against any rules, Capital One UK has a Real Rates promise, whereby the APR you are preapproved for is the one you’ll get when you apply for credit.
A third (33%) of people are not aware that you could receive a higher APR rate when applying for a credit card.
In a bid to raise awareness of repricing, Capital One UK launched the Credit Made Clearer campaign to ensure that anyone looking to take out a credit card in the future is aware of the potential increased cost of borrowing.
