Sam Dunn: We can't afford to lose this gladiators' contest

Think of something that's worth celebrating from the year 1966 and, if you're English, you'll probably opt for the national football team's World Cup triumph.

Think of something that's worth celebrating from the year 1966 and, if you're English, you'll probably opt for the national football team's World Cup triumph.

But history also records that the UK's first credit card was launched in 1966. And this neat piece of plastic would come to revolutionise the way we spend our money.

The business acumen was Barclaycard's, and its astute move soon reaped remarkable rewards. Within a year, the bank had signed up more than a million customers, and by the mid-1970s - despite competition from Access, the "flexible friend" - this number had grown to 3.5 million.

Nearly three decades on, and you could argue that Barclaycard spawned a monster.

The amount we've piled up on our credit cards has grown to nearly £60bn; more people than ever before are struggling with mounting debts, due in large part to financial illiteracy.

Confirmation of this doom-laden picture emerged last week when figures from the Citizens Advice Bureau (CAB) revealed that the number of Britons with serious debt problems has risen by nearly three-quarters since 1997.

Last year, CAB officers dealt with 706,700 consumer debt problems from individuals, compared with 405,800 seven years ago.

And, alarmingly, the research shows that things are getting worse.

One of the main reasons why so many people find themselves getting into debt is that, as a nation, we have very little financial nous. The Institute of Financial Studies has carried out its own research in this area and found that nearly four out of 10 of us struggle to comprehend financial products such as mortgages or individual savings accounts (ISAs), while a third of us lack confidence in handling our finances.

This isn't the first survey to say as much, and it certainly won't be the last.

Of course, neither report is trying to scare us off all things financial. Rather, the intention is to help us gain a better understanding of our personal finances - and, where problems exist, get round to doing something about them.

A particularly harrowing story was related last week during a Treasury Select Committee meeting attended by the heads of some of Britain's largest banks, including Lloyds TSB and HBOS (Halifax and Bank of Scotland). The delegates were told how a 21-year-old man committed suicide after he had amassed debts amounting to some £15,000.

At the same meeting, the banks squabbled over the merits - or not - of sharing financial information to better assess customers' credit history. This vital data helps lenders make critical assessments about whether to offer credit to individuals.

James Crosby, chief executive of HBOS, said he believed the pooling of such information could prove helpful, but Lloyds TSB chief executive, Eric Daniels, urged caution. He cited the example of the United States, where data sharing is linked to high levels of indebtedness and unsolicited approaches to the public from lenders.

Capital One, a US-based company, was also castigated during the meeting for the "minuscule" print that details the terms of its credit cards.

It's impossible to underestimate the importance of this gladiatorial clash: politicians versus banks. In one corner sit MPs, reflecting the concerns of their constituents and able to investigate banking practices they say amount to "profits by deception". Opposing them, the banks have mounted a vigorous defence.

Anything that helps us better understand how much we're paying for our debts is a valuable addition to our financial education.

Which is why it's shocking to find that, a year after the committee last grilled bank chiefs, it's still impossible for consumers to make a straight comparison of the annual percentage rates (APRs) of credit cards on offer from rival lenders. This is because the industry as a whole uses nine different methods of calculating interest.

The consumer body Which? is hopping mad about this lack of transparency - and who can blame them? Banks say they are making their changes clearer - but it's obvious they're not doing this fast enough.