Credit card companies continue to try and recoup costs

Prior to last year many credit card companies were charging extortionate penalty fees for late or missed repayments or for exceeding the limit on the card with many consumers paying a small fortune each year simply in charges alone.

However, in 2006 the Office of Fair Trading investigated credit card penalty fees, and as a result of this investigation ruled that credit card companies could charge no more than £12 per charge, whereas some credit card issuers had been charging £30 per charge previously.

Clearly, this ruling had a huge financial impact on the profits of credit card companies, and since this time a wide range of credit card companies have been trying to find ways in which to recoup the lost revenue that resulted from this ruling. From increasing interest rates to increasing foreign transaction charges, many credit card companies have tried just about every trick in the book. And the latest to jump on board is the Royal Bank of Scotland.

The Royal Bank of Scotland may be boosting their profits by charging their customers a penalty fee for failing to inform them of a change of address. The charge of £12 will be applied if the customer has been living at a different address to two months or more, or if two statements are sent out to an address that is no longer valid. The RBS is also rumored to be changing some of its charges and increasing charges in relation to cash transactions and ATM withdrawals made on the card.

A Moneysupermarket official, Richard Mason, was surprised with the new charge relating to change of addresses. He stated: "I've never come across this kind of charge before."

Tom Smith
14th May 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?

External Links:

• OFT press release on credit card charges
• OFT targets current account fees
• BBC news report on credit card charges