Stamp duty makes shopping around costly

The Government is preventing consumers from getting the best deal on credit cards by imposing annual stamp duty of €40 on each card account, it was claimed yesterday.

Fine Gael and the Irish Bankers' Federation (IBF) branded the levying of the stamp duty anti-competitive and a barrier to switching following the publication of the first credit card survey by the Irish Financial Services Regulatory Authority (IFSRA).

The consumer watchdog has compared the costs and key features of the main credit cards available to Irish consumers, including the annual percentage rates of interest (APRs), introductory offers and fees for late payments, cash advances and making purchases outside the euro zone.

Ms Mary O'Dea, consumer director of IFSRA, said credit cards were playing an increasingly important role in the way in which people managed money.

"There are a variety of credit card products available with different benefits so it is important that consumers know how to choose the credit card account best suited to their own particular needs," she said.

Consumers who pay off their balance in full by the due date should look for a card offering low fees and charges and the longest interest-free period, while people who carry over most of their balance each month should shop around for a card with a low APR, IFSRA advised.

Mr Richard Bruton, the deputy leader of Fine Gael and finance spokesman, welcomed the survey's publication but said charging stamp duty on the double to consumers who try to move to a cheaper credit card was doing more to remove competition in the industry than any other practice.

The IBF said the duty created a serious obstacle to consumers' ability to shop around as well as to the development of further competition in the marketplace.

Credit card stamp duty is deducted in April. To avoid being charged twice in one year, consumers who want to switch cards must cancel their old card before March 31st and sign up to a new card after April 1st.