Half of adults don't know their credit card interest rates

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Almost half of people who own a credit card are running the risk of being shocked at their bills as they do not know what interest rate they are on, a new study has claimed.

The Moneywise Consumer Opinion Survey of 20,000 people found that 46.5 per cent of credit card holders had no idea of the rate on their card.

Given that interest rates vary from the advertised rate, with the best rates generally given to those with the best credit records, being unaware of the rate can mean unknown added costs for those who do not pay off their bills on time.

Unaware: Half of us don't know what interest rates there are on our credit cards.

Credit cards typically carry interest rates of around 18.9 per cent Representative APR, and providers have to give the best advertised rate to 51 per cent of successful applicants under EU law.

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Customers don't tend to pay interest on their cards if they pay off the entirety of their bill on time, but will be hit with interest charges if they do not clear this debt.

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Reasons for taking out cards varied, according to the survey, but getting the lowest rates is not a huge priority among customers, with only 14.4 per cent of people saying they chose their card because of the low interest.

One in ten respondents chose their card because of the brand, while 13.6 per cent were attracted by the balance transfer offers that would enable them to shift their debt onto a card with a decent interest-free period.

The main reason for getting a credit card was the rewards on offer. This follows the growth of supermarket and retailer-branded credit cards which offer shoppers vouchers and cashback in exchange for spending.

The survey found the most popular rewards cards include American Express's British Airways card, which gives holders 3,000 Avios points if they spend £500 in the first three months, and Tesco Bank's Clubcard card, which gives customers one Clubcard point for every £4 spent.

But with some retailer-branded cards carrying higher interest rates than conventional credit cards, it is even more important to pay off your bills on time, or take advantage of zero interest periods.