Britons receive 'unwanted' cheques
Published On 19 November 2007
Approximately 326 million credit card cheques were sent out to consumers last year, 313 million (96 per cent) of which were sent without being requested, according to research from uSwitch.The price comparison service found that, of the 22.5 million consumers who have been sent cheques, only one in 50 has asked for them.
Cheques carry an average interest rate equivalent to 27.6 per cent APR on average, much higher than the 15.7 per cent average APR on a credit card.
With the average amount spent on each cheque at £976, uSwitch estimates that it costs consumers £298 million more in interest and charges to use cheques than to use their card. This equates to £73 per cheque.
Mike Naylor, a personal finance expert at uSwitch.com, explained: "Unsolicited credit card cheque mailings raise the big question about card providers' commitment to responsible lending. In 2006, the OFT suggested that the practice of issuing unsolicited credit card cheques should be banned, but this was never implemented.
"During 2006, at the height of the media frenzy surrounding credit card cheques, some providers may have scaled down their promotional activities, but nowadays it would seem that it's 'business as usual'."
Worryingly, the research revealed that 2.1 million credit card holders are unaware that different charges and interest rates apply to credit card cheques.
