The Office of Fair Trading (OFT) is warning that credit card customers should read the small print of their card agreements to avoid companies taking an estimated £400m a year in unfair charges.

The OFT says credit card agreements are full of small print jargon which leave customers confused and vulnerable to charges.

It says 70% of people do not shop around for the best deal and many companies make it impossible for customers to find the card that suits them best. Credit card agreements use a confusing amount of jargon which varies from one company to the next. The OFT wants to see the same terminology used by all companies when describing their credit cards terms and conditions. By opting for cards charging typical interest rates rather than the best, customers are paying £137 extra each year, adding £400m to the profit pot of the card providers.

The OFT report criticises ‘opaque pricing’ which includes complex information beyond the comprehension of most customers. It refers to the Financial Services Authority concern that providers are gaining from the lack of price transparency. Card providers are accused of creating ‘noise’ by adding to the quantity and complexity of the information masking the real price that customers are likely to pay.

The OFT report follows claims by the consumer group Which? That cards with the same APR can have a price difference of up to 40% when charging differences are taken into account. And many commentators are concerned that the lack of transparency over charges and rates is adding to the £66bn credit card debt in the UK.

• PPI claims upheld -14/02/2008
• Court case ends -08/02/2008
• Cases need freezing -07/02/2008
• Court claims may resume -06/02/2008
• OFT Continues Its Defence -01/02/2008