Inside the Credit Trap: 5 Tactics Lenders Hope You Don’t Spot

We wouldn’t go as far as to say that these are mis-selling, but the tricks Credit Card Companies use to not be transparent are questionable at the very least. Some of them you may not be aware of, but once you have read this article, you may wonder how you didn’t notice them before.

UK Credit Companies are supposed to be transparent and not misleading, and for the most part that is true – but strangely they do seem to get away with some dirty tricks. We’ve spent a little while compiling some of the major ones that we are aware of.

When you log into your credit card app or visit your credit card provider’s website, you’ll notice that interest charges never appear in your current list of transactions on the summary page. Instead, they’re always tucked away in the previous month’s statement.

What you do see is a list of transactions from the current statement period only – everything before that is cut off. To view any interest you've been charged, you have to manually open a past statement. This makes the interest charges far less visible and not immediately apparent to borrowers.

Now, it’s technically possible that the interest was charged just moments before the monthly statement cutoff, and so it appears in the previous month’s statement by default. But there’s no real reason the summary page – usually the first thing users see – can’t display, say, the last 20 transactions, even if some fall into the previous statement period. That would provide a more transparent view of recent account activity.

Of course, what we suspect is that credit card companies benefit from keeping interest charges less visible. With around 80% of borrowers opting for online-only statements, it becomes all too easy for these charges to go unnoticed – hidden behind a layer of digital paperwork. Those opting to receive their statements in writing via post will usually see their interest charges for that month displayed much more clearly.

In our view, this is a clear case of mis-selling – one seemingly endorsed by the Financial Ombudsman Service, who either don’t understand the issue or simply don’t care.

Most UK borrowers have never even heard of trailing interest. So what is it?
Trailing interest refers to the interest charged on your credit card balance between your last statement date and the day your full payment is received – even if you pay the statement balance in full and on time.

The real problem is this: credit card providers in the UK routinely claim in their marketing and summary literature that no interest will be charged if you repay the monthly balance in full by the due date. But buried deep within their 10,000-word terms and conditions, they add a contradictory clause – that this only applies if you “always” pay in full.

We’ve been involved in lending for many years, and this is exactly the kind of thing Section 62 of the Consumer Rights Act 2015 was designed to prevent. You can’t say one thing to customers, then hide a contradiction in the small print. That’s not just unfair – it’s arguably unlawful.
We’re genuinely surprised this hasn’t yet been challenged in court. If it is – and the consumer wins – it could open the floodgates. Credit card providers may end up having to refund tens of millions of pounds in trailing interest, going back years. It would also be a deeply embarrassing moment for both the Financial Ombudsman Service and the Financial Conduct Authority, who allowed it to happen on their watch.

This is a real story that happened to a member of our team, so we know it does occur. Because details like this are highly confidential, it’s extremely difficult to prove on a wider scale. However, based on the stories we hear from the public, there appears to be a trend – borrowers who repay their balances in full often find that their credit limits are reduced shortly after.

In our case, one of our team was regularly running a balance of around £8,000 each month on their BarclayCard, with a credit limit of £11,800. At an interest rate of around 33% APR, this meant they were paying approximately £220 in interest each month.

Then they changed their Direct Debit setting to clear 100% of their balance every month – effectively meaning Barclaycard could no longer earn interest from them. Just two months later, their credit limit was cut from £11,800 down to just £1,500.

From a risk perspective, there seems to be little logic in this. In fact, it’s the opposite of what you might expect. One would assume that the higher the limit and the lower the risk, the more stable the credit line would be.

The only explanation we can suggest is that credit card companies have started to prioritise profit scoring over credit scoring. You could view it as risk versus reward. When the user had an £8,000 balance, the card provider was earning around £200 a month in interest – a healthy return for that level of risk. But if the balance is being paid off in full, the provider is still carrying the risk of the full credit limit being used at any time, without the benefit of earning interest. That risk-to-reward ratio suddenly becomes much less attractive.

Another, possibly more strategic reason could be that the provider is trying to get the borrower to “start over” – encouraging small balances again, which could then gradually increase over time.

Anti-limit hoarding may also play a role. Credit limits allocated to one customer might prevent that same credit from being used elsewhere. This idea does make sense – card providers often have internal budgets to distribute across their customer base.

Ultimately, credit card providers are expert manipulators of consumer behaviour. We can only speculate on the reasons behind decisions like these – but rest assured, there will be one, and it will likely serve their bottom line.

It’s no secret that credit card providers aggressively compete for prime borrowers. To attract customers with excellent credit ratings, they often promote enticing offers – one of the most popular being 12, 18, or even 24 months of interest-free balance transfers.

But what many people don’t realise is that these deals often come with hidden catches.

The most obvious is the balance transfer fee – typically around 3%. For example, transferring a £10,000 balance would cost £300 upfront. That might sound steep, but when you consider that a typical card charging interest on a £10,000 balance could incur £200–£300 in monthly interest, paying the equivalent of one month’s interest for up to two years of breathing space is actually a smart trade-off.

In that sense, it’s a no-brainer – as long as you keep up with your payments.
Here’s the real sting in the tail: miss just one payment, and you’ll likely forfeit the entire interest-free period. Many don’t realise that a single slip – whether due to a genuine mistake, a failed bank transaction, or forgetting to update a direct debit – can trigger a return to full interest rates.

Most people worry about the £25 late fee – but in this case, the real penalty could be over £200 in interest every month for the next 18 months. That’s a hidden cost of nearly £3,000 – all because of a single missed payment.

Let’s be clear – there is no such thing as being genuinely “pre‑approved” for credit. The FCA would be rightly alarmed to find any firm offering or implying credit approval before conducting proper affordability and creditworthiness checks. No lender can know how much an applicant earns, what their commitments are, or whether they can afford repayments – not until the full application is submitted and assessed.

The term “pre‑approved” is therefore highly misleading. At best, a lender could claim that an applicant has a high likelihood – perhaps over 90% – of being accepted, but to state that approval is already in place is inaccurate and non‑compliant with FCA rules.

We don’t have independent data on how many people are misled by the promise of being “pre‑approved” only to find themselves declined later, but we strongly suspect the number isn’t small – it’s likely well above 10% of applicants. These offers often amount to little more than marketing gimmicks.

The FCA’s Handbook is clear: false or misleading promotions are not permitted, and firms have faced substantial penalties for breaches of these rules. It would be worth seeing the FCA take a closer look at this language and the potential harm it causes to consumers.

Interest-free introductory offers, balance transfers, and up to 56 days interest-free can make credit cards one of the cheapest ways to borrow - if used correctly. But step outside that narrow comfort zone, and the costs can escalate quickly. Be aware of the tricks we've outlined above, and always stay within your means. Just because your credit limit is there, doesn't mean you need to spend up to it.