Credit check agency Experian is launching a new comparison service feature that will give consumers the real rate they are charged when applying for a credit card.
Under current rules, credit card and loan providers are only obliged to offer the advertised headline representative annual percentage rate (APR) to 51% of customers who apply.
This means that the remaining 49% can be offered a different deal at a more expensive rate.
Experian says that consumers who use the new service will see the actual rate they’ll get when shopping for cards with certain providers.
Personal finance expert Andrew Hagger says: “It's always been a bit of a lottery for customers when they apply for a credit card as they never know what interest rate they will be offered until the application process is complete and a mark left on their credit record.
“The representative APR quoted is only a rough guide and often bears little resemblance to the rate a customer is granted.”
Experian says that customers often won’t know what that is until they’ve completed an application, which will also leave a mark on their credit report.
Recent research from Shawbrook Bank found that more than one in five (21%) consumers who successfully applied for a loan received a higher APR than the rate that was advertised, with the average difference being 2.4%.
Amir Goshtai, managing director of marketplace and affinity at Experian, says: “We see offering real rates as a true game-changer in a highly competitive market.
“We are already in discussions with other lenders to sign up for real rates. It’s not right that nearly half of those looking for a credit card may not get the rate they see advertised – and often won’t know what deal they’ll get until after they’ve applied.”
So far, Virgin Money and Capital One have signed-up to real rates with Experian, while customers who are pre-approved for cards from Aqua, Marbles, MBNA and Barclaycard will also see the rate they will get before applying.
The introduction of the service comes after Experian launched real rates for loans in May. Providers signed-up to offer real rates include Likely Loans, Zopa, Lendable, and Shawbrook.
Mr Hagger adds: “It's a positive step if customers can see the actual rate they will be getting before fully completing an application form and, hopefully, this much-needed transparency will soon become the norm within the credit card industry.”