Two thirds of Irish credit card users unaware of their credit card interest rate level, and how it w
Posted on: 18 Jan 2023
Irish League of Credit Unions (ILCU) survey on credit card spending finds consumers still lack understanding of how credit card interest is calculated
Over half of Irish consumers own a credit card, however 66% do not know how much interest they pay
58% of respondents project that they will use their credit cards for monthly ad-hoc purchases, despite this lack of awareness on interest
61% say they do not understand how credit card interest works
A national survey carried out by the Irish League of Credit Unions (ILCU) into the spending habits of credit card users in Ireland has revealed that there has been no improvement in consumer awareness of interest rates or spending habits when compared to previous ILCU surveys conducted in 2021 and 2020.
The survey found that 51% of Irish adults own credit cards. More than half of those surveyed think adults in Ireland are too reliant on credit cards to pay for goods. The majority of purchases made using credit cards in 2023 will be monthly ad-hoc purchases, while 12% will use credit cards to pay for future planned holidays.
The most concerning trend was the discovery that 2 in 3 Irish adults do not know how much interest they pay, which is an increase on last year’s findings. Of those who were aware that they paid interest, 24% believe they pay 5% or less, and 1 in three believe they pay between 18-24% interest on their credit cards. Overall, the survey highlighted a significant lack of understanding on how interest is applied.
Commenting on the findings, ILCU Head of Communications, Paul Bailey said, “The results of this year’s survey are worrying, especially amid the cost-of-living crisis that we are currently going through. The fact that more than half of those surveyed don’t have a true understanding of how credit cards work is a concern, particularly given the number of people who use their credit cards for monthly ad-hoc purchases.
65% of those surveyed will use their monthly income to clear their balance each month. However, 18% will make only the minimum payment each month, while 9% are frequently unable to cover the minimum charge.
Paul Bailey continued, “Credit card companies have a duty to make sure that their customers understand the product they are offering. I would encourage all members of the public to visit the Competition and Consumer Protection Commission website https://www.ccpc.ie/ before applying for a credit card, and make sure that they are aware of the charges associated with a credit card account.
“Credit unions make every effort to put a focus on financial education, ensuring that our members have the tools needed to make positive choices that protect their financial well-being. Credit unions can offer small loans and supports to our members for purchases such as a car, home improvements or other necessary goods and services.”
The national study was commissioned by the Irish League of Credit Unions (ILCU), and carried out by independent research company, iReach Insights, in December 2022. 1,000 adults responded to the online survey.