Who are Defaqto?
Defaqto are an independent financial research company that specialises in rating, comparing and analysing financial products.
They formed in 1994 and since then have built a database that covers the whole of the financial market, across banking products, insurance and investments.
At Confused.com we have a relationship with Defaqto that allows us to display their Star Ratings to help customers choose between the many different credit cards on the market.
What are the Star Ratings?
The Defaqto Star Ratings are a simple way of quickly identifying credit cards with the best features and benefits. The cards are given a rating of between 1 and 5 stars by the experts at Defqto, the higher the amount of stars, the better the features and benefits.
Up to 101 different features are taken into account to calculate the overall star rating. The criteria used to determine the rating are based on what is viewed to be more important to customers, such as the length of any introductory period, the Representative APR, or if the card has a reward scheme.
Glossary of key Credit Card terms
Representative APR
APR stands for Annual Percentage Rate and is the effective rate of interest, over the year, which reflects all the costs of the credit, including interest charges and other fees (such as an initial arrangement fee and any annual charge). It is 'representative' as 51% of those accepted for the card have to be offered the advertised APR.
Representative Example
New regulations that came into force on the 1st February 2011 now mean that every credit account advertisement has to include a representative example of the total cost of the credit. The example includes all the required 'standard information', including the representative APR, an example credit limit and the rate of interest on purchases after any introductory period has expired.
Credit Limit
This is the maximum amount that your provider will allow as credit i.e. a limit that cannot be exceeded as the balance owing on your credit card.
Issuer/Provider
This is the company who process payments made with the card. The three main issuers are Mastercard, VISA and American Express.
Balance Transfer
This is when you move an outstanding balance from one credit card onto another.
Purchases
This is where you pay for goods or services using your card – it doesn’t include things like cash withdrawals, cash advances or money transfers.
Rewards
Some providers offer incentives for you to use your card, such as rewards points, discounts or cashbacks. Each issuer that has a reward scheme will have different terms and conditions as to how the rewards are earned, and how you can then redeem them.