Klarna survey finds 0% can calculate the cost of credit card purchases after interest
Klarna, one of the world’s leading retail banking, payment and purchasing services, today revealed that only six in ten credit card users know how much interest they are charged, according to a Yougov study commissioned by Klarna. Additionally, not a single respondent was able to correctly calculate the cost of a typical credit card purchase after accounting for interest. This is despite the fact that credit card companies follow strict disclosure rules set out in the FCA rules and despite their regulation.
The findings led Klarna and Fairer Finance, a consumer advocacy group, to call on the industry today to review disclosure rules for regulated finance.
“It’s shocking that more than half of credit card users don’t know how much interest they’re paying on their purchases,” said Alex Marsh, director of Klarna UK. “It is essential that consumers understand the basic terms of their credit agreements, especially at a time when household budgets are under massive pressure and credit card companies are charging high rates. record interest.
James Daley, Managing Director of Fairer Finance, commented: “Credit cards are incredibly complex products, with varying levels of interest rates and fees. This latest research proves what we’ve long suspected – that the majority of customers struggle to understand exactly what they’re being charged. This is compounded by a set of outdated regulations, which force card companies to bombard customers with a series of jargon-filled documents and disclosures during the application process. The Consumer Credit Act and FCA regulations urgently need to be overhauled and replaced with more effective rules that ensure customers receive the information they need, at the right time, and in a format and language that they can understand.
Klarna worked with YouGov to show 2,000 UK consumers a typical credit card sign-up process and asked them to calculate the total cost, including interest, of a typical purchase. Not a single respondent was able to correctly calculate the amount.
In contrast, research has shown that consumers understand the terms and conditions of BNPL products better than credit cards. After reviewing a Klarna BNPL payment page, 7 in 10 respondents said it was clearer when they should pay, and only a quarter (26%) said it was clear when they should pay by credit card to avoid additional charges. .