Annual credit cards fees – is it just a matter of time before they are reintroduced?
Following the Office of Fair Tradings (OFT) cap on fees, card providers may need to bring back the dreaded annual card fee of up to £35 or raise interest rates by up to 2% to recoup estimated losses of £1bn, claims a report issued by PricewaterhouseCoopers (PwC).
It would appear that credit card companies have not been slow on the uptake and in the time following the OFTs involvement over nineteen card providers have increased their interest rates by around 2.5%; some very unfortunate customers could be facing as much as 12% on their bills. The credit card ‘Tart’ may have soon had his day or had their choice severely curtailed.
The knock on affect of low interest rates, introductory offers, free gifts and bad debt followed by the work of the OFT have made the credit card companies look at the ways they can redress their bottom line, The practice of introducing card fees is also here; Lloyds TSB has launched a new card, Premier Amex with a £4.95 per month fee available for Premier Current Account customers but is does offer a comprehensive range of benefits.
The OFT may have succeeded in dealing with uncapped fees but it may have opened up a whole new can of worms with regard to interest rates and monthly/annual fees many of which will affect consumers who signed up to the original terms but will now be punished for actions beyond their control. It will take one major player to introduce fees and everyone will follow until it is considered the norm.
Now the Office of Fair Trading are looking at fees levied on current accounts; could this be the beginning of the end for free banking?