MPs accuse banks over 'baffling' credit card rates

Banks were today accused of cheating credit card customers with a "baffling" array of interest rates. MPs said the industry had dismally failed to honour a pledge made last year to make it easier for borrowers to compare cards.

In the worst example, the USowned Capital One bank had published terms and conditions in small print listing 144 possible interest rates for a single card.

This makes it almost impossible for consumers to work out whether they have got the best deal, according to members of the Commons Treasury select committee.

Labour member James Plaskitt said: "There is no way that can be defined as transparency, it's pure obfuscation."

Bosses from three of the biggest issuers - Lloyds TSB, Capital One and HBOS, the group that owns the

Halifax and Bank of Scotland - were today appearing before the committee, which is investigating the charges and interest rates on credit cards. Today's session follows a report from consumer group Which this year, showing that banks use 11 different methods of working out interest on cards.

The MPs said banks had failed to deliver on their promise to publish standardised "summary boxes" setting out terms and conditions clearly.

Labour MP Nigel Beard said: "They have come up with four or five different ways of presenting the information. There is really no point in having the boxes unless they are done in the same way. You could have two banks publishing exactly the same APR, but applying it so differently that the borrower would end up paying 50 per cent more on one card than another."

Paul Rodford, head of policy at industry body Association for Payment Clearing Services, said a new universally agreed definition of APRs is due to come into effect at the end of this month.

The committee is also tackling the industry on the issuing of unsolicited credit-card cheques. Banks have been accused of using the cheques to "bribe" borrowers with irresponsible instant loans of up to ?20,000 interestfree for up to nine months.

Another issue being raised today is the way in which some banks target teenagers with offers of interest-free credit within days of their 18th birthdays.

The committee acknowledged the credit-card industry has made some progress since its first damning report in December, but said there is still a long way to go.