Consumers are not being adequately informed about the costs of using their credit cards, according to a University of Virginia study prepared for the General Assembly.

The study, "Credit Card Billing Practices in Virginia," contends that consumers are not informed of "the financial consequences of rolling over unpaid balances.

Currently, as required by Virginia law, banks and retailers do not impose a finance charge on a cardholder if the account balance is fully paid within the billing cycle.

However, if the account is not paid in full, an increasingly common practice is for card companies to charge interest in the second billing period retroactive to the date when the unpaid items were purchased, according to the report.

Moreover, depending upon how finance charges are calculated, "People who have unpaid balances on their credit cards can pay more than double the stated annual percentage rates and not get a 25-day free period," said the report.

Consequently, the report argues that consumers who roll over their credit payments are being subsidized by those credit card owners who pay up promptly.

"The pricing of bank and retail credit cards, in effect, reflects the need to cover a major share of the total costs of credit card operations through finance charge revenues derived from accounts with rollover balances," said the report.

To help compensate for what the Colgate Darden School survey described as "market deficiencies," the report made several recommendations to the General Assembly including:

*Prohibiting the calculation of finance charges using purchases from a previous billing cycle.

*Allowing a user-fee for a credit account by eliminating the statutory "free period.".

*Barring minimum finance charges and late fees.

*Repealing statutory provision that mandates free period be given on purchases.

*Requiring a standard method of assessing finance charges.