20 November 2008
Consumers are being urged to avoid using credit card cheques as a quick fix solution when they do not have cash available and to use them as a last resort.
According to uSwitch.com, they could leave consumers significantly out of pocket thanks to the hefty fees and interest rates associated with them.
The independent price comparison and switching service found that in the last 12 months, consumers have used 3.2 million credit card cheques, spending £3.6 billion.
During the same period, the average amount that credit card cheques have been written for has increased from £976 to £1,141.
However, the research shows that 86% of consumers who use credit card cheques do not know how much their card provider charged in terms of fees and interest rates.
Perhaps rather worryingly, around one in ten believe there are no fees for using them.
Louise Bond, Personal Finance Manager at uSwitch.com, said: "It is both alarming and concerning that so many consumers believe these cheques are friendly freebies."
The publication of the research comes after Gordon Brown promised to crack down on credit card firms charging high interest rates, insisting he wanted to see a "new responsible approach" to lending.