Credit card with 23.5pc interest

LAUREN NOVAK

PEOPLE are being warned to avoid signing up for credit cards with high interest rates to pay for their Christmas purchases.

Consumer group Choice says it is "standard practice" for credit card companies to "aggressively market" at this time of year.

One company, GE Money, has recently mailed out an offer for a card which charges between 21 per cent and 23.5 per cent interest per year.

The GE Money MasterCard offers 55 days' interest free credit, limits from $500 and access to cash.

GE Money spokesman Keith Ritchie said the card was targeted at people who had trouble gaining credit approval from banks, and he said the higher interest rate was charged because the company was taking on "more risk" with such customers. Mr Ritchie said credit card companies generally charged between 18 and 20 per cent interest and the GE MasterCard was not much higher.

Choice senior policy officer financial services, Nick Coates, said he had not come across a card with an interest rate higher than 20 per cent.

"That is a very high rate," Mr Coates said.

"We would hope to see that being clearly outlined in the advertising material.

"We don't want to see these things in fine print at the bottom of the page." Mr Coates said that credit card companies took advantage of increased shopping activity over Christmas.

"It is very concerning because we see an increase (in debt) afterwards in the hangover period," he said.