Central Bank review finds over 400,000 credit cards are on historic high interest rates

Since 2022, under legislation, new credit card accounts cannot have an Annual Percentage Rate (APR) of greater than 23%. A review by the Central Bank of Ireland has found that, of the approximately 1.3 million credit card accounts in Ireland, over 400,000 are on APRs above 23% that pre-date this legislation. These customers may not be aware that they could get a cheaper rate on another product.

The review also identified other issues including poor handling of customer complaints, issues in how credit cards are marketed to customers, and limited supports provided to customers in financial difficulty. The Central Bank is following up directly with firms on these issues to ensure that appropriate actions are taken to address the findings of the review, including making customers on these higher interest rates aware of their options. In its letter to firms (PDF 118.59KB) the Central Bank also describes instances of good practice identified in some firms, which firms across the sector could follow. 

Speaking on publication Director of Consumer Protection Colm Kincaid, said: "We completed this review of customer supports for credit card lending in the context of our ongoing work to ensure firms are supporting consumers in the face of cost of living challenges. On finding so many customers are on historic high rates, we have told relevant lenders to take action to make customers aware where they have these higher rate accounts, and to support them to consider options available to them if they wish to make a change. 

"Taking some simple actions could result in real savings for consumers. If you are a credit card customer, there is no need to wait until you are contacted by your provider. Check your credit card statement now and see if your firm, or another, can offer you a better rate.  For many of us, this is the biggest spending time of the year, and credit cards are an important part of the market in offering consumers payment choices – but don’t leave yourself paying more than you have to. To support consumers, we have published information on our Consumer Hub with details on what to consider when looking at credit cards.

"The review also highlighted other issues linked to customer services and supports, which is consistent with similar issues we have seen in other reviews this year. Customer service levels in regulated firms will continue to be a priority focus for the Central Bank into 2025. There is a lot firms can do a lot at a practical level to make improvements to deliver the service consumers rightly expect."

ENDS

Notes to Editors

Further information: [email protected]

The Annual Percentage Rate (APR) is the total cost of borrowing for a year, made up of a combination of interest and fees.

The review on Customer Supports for Credit Card Lending was conducted across five credit card lenders, who together hold approximately 97% of all personal credit card accounts in the Irish market. The review looked at key measures taken by firms to support their customers in switching to the most suitable products, and in resolving financial difficulties. It also assessed the firms’ complaints handling processes and how credit card products are marketed and distributed.

The Review was conducted through a number of core supervisory activities, including:

1. Review of over two hundred online credit card advertisements, including webpages;
2. Assessment of a sample of customer complaint files, including reviewing over one hundred recorded telephone calls and transcripts of chat logs, between firms and their customers
3. Evaluation of a number of customer disclosures; and
4. Quantitative data collection and analysis.

Along with the issues identified, the review found positive practices in some firms, including allowing existing customers to avail of promotional offers and frequent prompts on webpages to review fees and charges.  We also found some firms issuing written as well as verbal communication to customers clearly advising of all actions needed to fully close a credit card account and reducing the documentation needed for the credit card application process.

The review was undertaken as part of a phased programme of work to ensure firms are supporting consumers to navigate this changing economic landscape, as outlined in the Dear CEO letter (PDF 102.21KB) issued in November 2022. This has included a sustained focus on supporting borrowers across the financial system (PDF 554.47KB), including consumers of credit card services.

For consumers dealing with financial difficulties or struggling to repay debt, the Money Advice and Budgeting Service (MABS) provides free and impartial advice to help you manage your money and take control of debt.