Applying for a credit card? You'll pay 9% more than advertised for a patchy credit score

/li> 0

comments

Banks are routinely charging credit card customers up to 9 per cent more than the advertised interest rate.

When you apply for a credit card, only the very best customers get the top deals. While some banks will refuse your application outright if your credit rating is less than squeaky clean, others will offer you a card with a higher rate than the one you originally applied for.

In fact, banks only have to offer their headline rate to 51 per cent of customers they accept. This means the remaining 49 per cent of customers may get a worse deal, paying up to 9 per cent more than they were expecting, according to research by financial website Moneycomms.

Different rates: On a £2,000 balance, an extra 9¿per cent in interest would cost customers £180 a year more

American Express, Halifax, Lloyds, Nationwide, Royal Bank Of Scotland and Tesco Bank are among those who deal out credit cards in this way.

They each publish the minimum and maximum rates they offer borrowers.

For example, Halifax’s Clarity credit card advertises an interest rate of 12.9 per cent. However, this is the minimum rate it offers and given to those with spotless credit records

  More... Longest ever 0% balance transfer card is now 26 MONTHS as Barclaycard responds to Tesco move The best balance transfer credit cards to help clear your debts

The maximum rate is 21.9 per cent, which means some borrowers will end up paying much more than they thought.

On a £2,000 balance, an extra 9 per cent in interest would cost customers a further £15 a month — that’s £180 a year more.

Barclaycard also prices its credit cards this way but doesn’t publish rates. First Direct, HSBC, MBNA and Santander, on the other hand, do not follow this system.