Understanding credit card charges can be confusing

The Prime Minister has given his backing to so-called "honesty boxes", which would help consumers understand and compare credit card charges.

The "honesty box" is a simple table which standardises the presentation of charges and fees in all promotional material for card companies.

The idea has been inspired by the "Schumer Box" system in the US, named after a New York senator, which means all credit card promotions must carry terms and conditions in a "clear and conspicuous manner," and in a table format.

Tony Blair told MPs: "There is indeed enthusiasm for the so-called honesty boxes ...to set out in advertisement or application forms the key applicable interest rates or charges.

"I have got no doubt at all this will be an important way of ensuring that people, when they borrow, borrow responsibly."

Credit review

The Department of Trade and Industry is currently in the middle of a major review of consumer credit law.

If credit card companies are even taking 0.5% extra by their hidden charges that amounts to �240 million that British consumers are being ripped off Barry Gardiner MP

Campaigners say honesty boxes would give consumers important information such as fees and repayment terms, which can often be missed by consumers.

Mr Blair said it was a "serious issue" that British consumers currently owe �48 billion to credit card firms.

The Prime Minister was responding to a question by Barry Gardiner, a Labour MP, who is concerned about hidden fees and charges levied by credit card companies.

Speaking afterwards, Mr Gardiner said: "This figure of �48bn is quite staggering. What it means is that private individuals are borrowing for private consumption twice the total amount that the government is borrowing to spend on public investment. That is simply unsustainable.

"If credit card companies are even taking 0.5% extra by their hidden charges that amounts to �240 million that British consumers are being ripped off."