Credit card customers penalised for shopping around, says The Motley Fool

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Credit card customers penalised for shopping around, says The Motley Fool

Credit card users are being penalised for shopping around for better deals, according to finance expert.

Director of The Motley Fool David Kuo said customers who were looking for a good deal were the ones worst affected by credit searches. While lenders advertise a typical rate it only has to be offered to two-thirds of customers, with the rest receiving a lower rate.

"It is almost like penalising somebody for browsing round the shops and charging them a higher price when they do come back to you afterwards," he added.

Mr Kuo made his comments after the Treasury Committee heard evidence on the extent these searches are affecting people's credit scores.

Loan firms are deciding who to lend to by checking on individuals credit ratings and each search is recorded. People with multiple searches against them are thought to be missing out on the best credit deals.

The committee was told more than five credit applications within three months would have a negative affect, but it would be so small it would not harm a 'good' applicant.

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