UK Consumers Spark Inquiry Into 'Hidden' Credit Card Fees

A UK consumer watchdog is to investigate the handling fees charged when switching to interest-free credit cards. Whilst UK consumers are charged these fees it has emerged that the same UK-based banks are waiving the same fees for overseas consumers.

UK consumers have complained in their numbers to the Office of Fair Trading (OFT) regarding theses fees, resulting in the OFT investigating these charges. The majority of UK credit card issuers now levy these fees leaving consumers less than happy at what they perceive to be another example of 'rip off Britain'.

Banks such as the Royal Bank of Scotland and HSBC who have interest in America, currently levy charges against their British customers who are after introductory interest free deals. However, American customers currently do not have to pay these charges.

UK consumer groups have voiced their disapproval at these fees and feel they are just another moneymaking scheme and do not accurately reflect the administrative cost of these transfers. The banks, however, say that the charge is necessary in order to claw back the cost of offering interest free deals.

" If there is a cost of transferring a balance it should be related to the cost of the work involved and should not be another way of taking money out of consumers 'pockets'," said Martyn Evans, director of the Scottish Consumer Council.

Peter French, of the Independent Banking Advisory Service watchdog, added: "The customer does not want a nasty aftertaste from something that appears to be free."

However, some feel the banks are levying legitimate fees as part of their business costs and as such should not be condemned. Sandra Quinn of Apacs, the UK payments association, said: "Credit card companies are not charities, they levy fees like any other business levies fees."

Alisdair Milton
23rd March 2007

More information:

• Credit Card Charges
  Credit cards appear to have only one cost to a user – the interest charged on purchases, but there are a whole raft of hidden charges just lurking below the surface. So, some cards offer an annual payment option in return for certain benefits. What is the best option, and in what circumstance
• Making Credit Card Fees Easier To Understand
  On average, UK credit card issuers make somewhere between £300 and £400 million a year in fees charged off of UK credit card users who have not fully understood how the credit card issuer has arranged the charging of their fees and who do not complain directly to the card issuer for any excessive or incorrect fee charges. In anyone’s language, this is a staggering amount of money!
• How To Avoid Paying Those Pesky Credit And Debit Card Fees
  It seems that UK credit and debit card providers would like to charge us each and every time we use our plastic cards these days. While the charge for each separate individual transaction may not seem like much, add them up over a month or two and suddenly the amount has some value. So, how do we avoid having to pay pesky fees to UK credit and debit card providers?