It's time to stop teaser rates from tricking us into overpaying for credit

0% balance transfer cards come with often hidden fat fees

Card providers are trying to lure customers with an increasing range of upfront deals EPA (EPA)

Teaser rates are simply a way to trick us into taking the wrong financial product. I’ve written that line before but there has been some real proof published. Which? asked people about 0 per cent balance transfer credit cards. Seven in ten people wrongly thought the transfer was completely free, even though they were shown that there is a fee.

In fact the fee is often around 3 per cent so can add up to a hefty charge for getting what is advertised as an interest-free card. Anyone transferring £5,000, for instance, would be lumped with a bill of £150 for the privilege. That’s far from free.

In the research a third of people picked the card with the lowest APR, even though it had a higher balance transfer fee. The decision would have been a costly one - leaving with them with a plastic card that would have worked out three times as expensive as a no-free but higher APR card.

Does that mean that we’re all a bit stupid when it comes to finance? Far from it. It means we don’t pay enough attention to the small print and examine closely all the terms and conditions to find out the true cost of any financial deals we make.

But let’s face it, who’s got the time? Sure I know there are some of you who diligently take the time to ensure you get the best deal. I know, too, that many people get a big kick out of being smart with their saving and spending and will simply say ‘buyer beware’ and that anyone who doesn’t do their same as them deserves to lose out.

My view is that people shouldn’t be penalised for not examining closely the smallprint. I believe that the true cost should be in the headline so the 3 per cent standard transfer charge on many credit cards should be as prominent as the 0 per cent offer. In fact I’d go further and ensure that the 18.9 per cent go-to rate is equally as prominent so anyone taking out the card realises that it’s not a free offer.

Which? wants the City watchdog to take a look at the issue of sneaky fees on cards. I’d like it to outlaw firms that don’t make the charges absolutely clear.