subject: Ireland Credit Card Rates and the Government Tax [print this page] Ireland Credit Card Rates and the Government Tax
In Ireland, the law requires that credit card companies publish the annual percentage rate of each credit card they sell, and not just the interest rates. This annual percentage rate, or APR, is very important to know since it should be used as a basis for comparing the rates of different credit cards.
Just a little over a year ago, the APR published by credit card companies in Ireland included in the computation all interest and all necessary fees that are charged regularly to cardholders, with the exception of the annual government tax. This made sense in a way since the tax is a fee levied by the government, so that credit card companies do not make any money out of this in any way. However, even though they do not profit from the government stamp tax, the fee is still felt by the cardholder, since it is still charged regularly each year, adding to the cost of borrowing money on the credit card. Because of this, the government decided to make it mandatory for all credit card companies to include the government stamp tax when computing for the credit cards' APRs.
The result of having the government stamp tax, which is a flat fee of 30 per year, added to the APR computation was felt not by existing cardholders not because their fees went up, since they have already been paying for it even before it was added to the APR computation, but simply because the APR listed on their credit card accounts went up. In short, a lot of cardholders got confused and thought that credit card companies have hiked up either their interest rates or some other regular fees. However, this is obviously not the case, and in general, credit card rates in Ireland actually stayed the same. Of course, eventually cardholders of banks that knew how to communicate well with their clients were educated about the whole issue.
For applicants though, the psychological impact is still very much felt, since the "increased" APR of all credit cards ireland companies offer makes you feel like you are getting a worse deal than you would have a couple of years ago. For this reason, it might be helpful to ask or look for published interest rates without the government tax, so that you can at least put things in perspective. Just make sure that you always factor in the difference between credit card rates before and after the government tax is added when comparing credit cards to ensure a fair comparison.
