Credit card companies continue to claw back cash

As credit card companies in the UK continue to suffer the effects of the ceiling limit that was placed on penalty fees last year by UK regulatory bodies, they are employing more and more tactics in an effort to claw back some of the revenue that has been lost as a result of reduced penalty fees.

Many leading credit card issuers have hit the headlines as a result of new rules and regulations that they have brought in – most of which results in a raw deal for the consumer.

A recent report has highlighted how many credit card companies have increased the cost of making a withdrawal on the card, with an average two percent rise over the past six months on the amount that it costs to make a withdrawal. The cash withdrawal fee now stands at an average of 23 percent, although one credit card, Vanquis, which is typically designed to cater for those with poor credit, charges 46 percent a year in interest.

Credit card companies have employed a variety of other strategies in order to try and get more money out of consumers, and this includes tactics such as increasing the number and type of transactions that are construed as cash transactions – for which higher fees are charged, adding annual fees to credit cards, charging consumers for not using their credit cards enough, increasing interest rates and fees, and even charging customers for failing to provide change of address details in some cases.

• 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

One official from Moneyexpert stated: 'Borrowing cash on your credit card is incredibly expensive and unless it's really necessary we'd urge people to think twice before doing it. The average APR was already expensive enough but card firms have pushed up rates by more than two% in the last six months. There are so many cheaper ways of borrowing than 23.48%.'

Tom Smith
14th June 2007

More Information:

• 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?