A third of Irish credit card customers are on high interest rates that are now illegal
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More than 400,000 credit card holders in Ireland are still paying interest rates above what the Central Bank has banned, with banks and lenders making "minimal efforts" to inform customers of better rates.
Since 2022, new credit card accounts cannot have an annual percentage rate (APR) of greater than 23%. However, a review by the Central Bank of Ireland has found that, of the approximately 1.3 million credit card accounts in Ireland, 32% are on APRs above 23% that pre-date this legislation and these customers may not be aware they could get a cheaper rate on another product.
As of the end of March, the review identified about 420,000 accounts on credit card products with APRs ranging from 24.5% to 27.9%. It was conducted across five credit card lenders, which together hold about 97% of all personal credit card accounts in the Irish market.
While these customers would have originally availed of the credit card prior to the introduction of the next maximum, the Central Bank said there was now at least one lower APR credit card product available from each lender.
In a letter to bank and lender chief executives, head of consumer protection supervision at the Central Bank Wesley Murphy said:
"The Central Bank is telling the relevant lenders to now engage with these customers to make them aware they are on this higher historical rate, that lower rate products are available, and the steps for the customer to take to see if one of those products would better suit their needs," he wrote.
"We want firms to challenge themselves to ensure they are not, consciously or unconsciously, taking advantage of customers’ inertia or any other habit or bias to their detriment. This is particularly important in the current economic environment where firms should take action to support customers facing cost-of-living challenges."
The review also found a need for more effective disclosures regarding the way interest is charged on credit cards, as this can be complex, with different approaches across lenders.
A variety of customer complaints were also noted, including cases of insufficient assistance being provided and poor staff communication.
The Central Bank said some of these issues had been acknowledged and addressed but others had not. It said complaints had been closed without proper investigation, insufficient learning from complaints, delays in identifying a more widespread issue and a lack of clarity on the process for making a complaint.