Top two banks charge the most for credit cards

The country’s top two banks, AIB and Bank of Ireland, are the only credit card providers that charge customers interest on money paid off their credit card if the bill is not repaid in full, according to a survey by The Sunday Business Post.

The survey asked providers whether a customer with a €1,000 bill would be charged interest on the €1,000 if they repaid €900 by the repayment date, or if the customer would only be charged interest on the outstanding €100. Only AIB and Bank of Ireland said the customer would pay interest on the €1,000.This means customers of the two banks could pay more than 18 per cent interest on money they have already repaid to their bank, simply because they did not repay in full.

Bank of Scotland, EBS Building Society, First Active, National Irish Bank, Permanent TSB, Tesco and Ulster Bank said the customer would only pay interest on the outstanding €100.

Barclays and MBNA said the customer would pay interest based on the average amount owed on their credit card each day. A spokesman for AIB said it charged interest in this way ‘‘as an incentive to customers to pay off their bill in full and on time’’.

‘‘If a customer made €1,000worth of credit card purchases on March 17 and did not repay their bill by May 16 when the payment was due, they would be charged interest of €21.88,” said the bank’s spokesman.

David McCarthy, managing director of Galway financial consultants McCarthy and Associates, said: ‘‘Credit card providers are charging what they like. Charges for credit card transactions outside the eurozone can be very prohibitive and you often don’t notice them because they’re built into the exchange rate.”

When customers use their credit card to buy something or withdraw cash in a non-euro currency, the credit card provider provides a foreign exchange service.

‘‘The rate offered by credit card providers is substantially lower than the market rate,” said McCarthy.