Teaser rates trick us into buying the wrong product - show the true cost in the headline

The 3 per cent standard transfer charge on many credit cards should be as prominent as the 0 per cent offer, says Simon Read

Teaser rates are simply a way to trick us into buying the wrong financial product. I've written that line before but here's some proof. When the consumer group Which? asked people about 0 per cent balance-transfer credit cards, seven out of 10 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 – a hefty charge for getting what is advertised as an interest-free card. Anyone transferring £5,000, for instance, would be hit with a bill of £150 for the privilege. That's far from free.

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

Does that mean we're all a bit stupid when it comes to finance? Not at all. It means we don't pay enough attention to the small print and examine 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 take the time to ensure you get the best deal. I know, too, that many people get a kick out of being smart with their saving and spending; they will say that anyone who doesn't do the same as them deserves to lose out.

My view is that people shouldn't be penalised for not scrutinising the small print. 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 companies that don't make the charges absolutely clear.