THE WORLD’S shoppers can be divided into two groups: those who pay their credit card bill off in full each month and those who don’t. Those who put payments on the long finger can look forward to receiving monthly calls from the nice Visa or Mastercard lady.

The spending habits of Irish consumers have changed dramatically in the past 10 years. Now, up to 50% of credit card-holders delay paying, incurring punitive rates and, in some cases, penalty fees of up to €15 a month, according to Europay, a payment organisation.

Michael Culloty, the co-ordinator of the Money Advice & Budgeting Service, says he has seen a significant increase in the number of people running up serious credit card debts.

“I’ve seen some with six cards all maxed to the limit,” he said. “The problem is credit cards are too easily available and providers are allowed to increase the holder’s limit without asking the person first. Of course, the holder is also responsible for his own spending.”

There are more than 2.5m credit cards in Ireland, carrying a total debt of €1.7 billion, according to a report issued earlier this year by the Irish Financial Services Regulatory Authority (IFSRA). This is three times the amount owed in June 1998, when the typical annual percentage rate (APR) was 22.7%. Thankfully, rates are lower today; those who use their flexible friends are charged an average of 12%.

Do not be fooled by this figure, however. A far higher rate is slapped on as soon as you renege on even one payment. The interest charged on credit is very high and every month a bill is not paid off in full, the debt is compounded.

An unpaid credit card debt of €2,500, at an interest rate of 18.9%, can accrue €472.50 over 12 months. Just think what you could do with that money.

When it comes to standard credit cards, AIB and Blue American Express charge the highest APR at 18.9%. This figure rises to 20.68% and 19% respectively for those who make cash withdrawals. National Irish Bank and Tesco personal finance offer the best rates in this category at 14.9%. One Direct Gold has the best rate in the premium card category at just 10.9%.

National Irish Bank has seen a substantial increase in the number of credit card applicants since it began offering a competitive APR rate in February, according to Nick Garbutt, the head of corporate affairs.

“Consumers are becoming far more savvy when it comes to shopping around for financial products,” he said. “They no longer automatically apply for a credit card from their local bank.”

There is far more to credit cards than the APR rate, however. A credit card provider can offer a great rate, but scratch beneath the surface and you may find that it will slap huge fees and punitive rates on you if you miss a payment or go over your credit limit. It is important to weigh up all the costs, not just the annual rate.

Late payment fees vary enormously. One Direct, which has the most competitive APR rate, penalises its customers the most. They have to pay €15.24 each time they miss a payment, as do customers of MBNA.

In contrast, AIB customers, who pay the highest APR rate, are charged just €3.81. Bank of Ireland, Permanent TSB and National Irish Bank customers incur no late payment fee at all.