There has been a worrying new trend over the past year in which credit card companies are introducing new charges to make even more money. As consumers' association Which? has found, these "ingenious methods" for getting more out of consumers are due to a decision made by the Office of Fair Trading (OFT) to cut standard credit card fees from over £20 to just £12. Indeed, it seems that many credit card companies are managing to compensate for this loss using subtle additions to their fees.
The types of new methods used are numerous. For example in May, the UK's biggest credit card issuer Barclaycard announced new fees up to £20 a year for low-usage, shortly followed by Lloyds TSB who similarly announced that they, too, would soon have a £35 a year charge for those who did not use their credit card enough.
Not only have there been new charges introduced for low use but many companies have raised interest rates for cash withdrawal and changed regulations for card use abroad. Some banks such as The Royal Bank of Scotland now charge cardholders a £12 fee if they move home without informing the bank - and only gives them two months in which to do so. Furthermore, some companies have even considered annual fees just for owning a card.
These charges will obviously affect millions of customers who are left with no choice but to pay them if they want to continue to use their credit cards. It is, however, a serious concern for many, that companies can charge, using any excuse.
Take the low use charge for example. None of the aforementioned banks have given a strict definition of what counts as low-use, and it basically takes those people out of the picture who have a credit card just for emergencies. Also, given this new trend to introduce more obscure charges, what's next in the line-up, we ask: a fee for mistyping your pin? A fee for card replacement should you lose it? In many cases, the charges may be small but it does make one wonder about the inevitable build-up that will result from them at our expense.
The banking industry insist that what they have done is a fair result of the decision made by OFT which would have otherwise resulted in banks losing a collective £60m each year. As Sandra Qunn of the UK payments association Apacs assures us, there has been no sneaky practice of charging consumers without their knowledge. In fact, every new charge has been upfront, with every statement now listing all the key information about charging.
However, this will probably do little to satisfy those thousands of customers who have been landed with fees that look like nothing more than rip-off strategies to reclaim lost revenue. Given that there are over 75 million credit cards in the UK, with many of us having more than one, it will be necessary to make sure you know the rules for each one so you don't get charged unaware.
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