Thousands of credit card customers have been dismayed to find that the APR charged on their accounts has been suddenly raised, in some cases to beyond the 30% mark. Chief culprit appears to be MBNA who have even hit customers with a whopping 34.9% APR, even when the customer claims to have had no problems with their account and no history of late payments or defaults.
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Low-risk credit card holders are facing fees, credit limit cuts or even account closure as credit companies seek to cut costs and increase revenue.
A survey by financial site Money Supermarket has estimated that one in four credit card customers have had to pay at least one penalty fee over the last twelve months.
Even after the OFT ruling that such fees were ‘disproportionately high’ and subsequently capped at £12, the UK credit card industry is said to rake in £230m a year by charging for missed or late payments.
UK credit card holders could soon be facing an extra £1bn a year in fees and charges according to a new report, as card issuers look to recoup revenue lost following rule changes to late payment charges.
A report by Moneyexpert.com has estimated that the British public paid a total of £553m in credit penalty fees during 2005, with at least 1 in 5 people being hit by a charge from their credit card company, bank, or other financial institution.
The game of easily transferring balances from card to card to obtain indefinite interest free credit could be nearing the end with the announcement by Egg plc that they are to introduce a fee for every balance transferred.