Credit card fees and refusals rocket in wake of credit crunch : Credit Card Guide

Credit card fees and refusals rocket in wake of credit crunch

The fees and charges on credit cards in the UK have rocketed as a result of the problems that have hit the financial markets due to the credit crunch, according to a recent report.

According to Moneyfacts.co.uk the effects of liquidity problems in the financial markets are now being felt by customers who are having to pay more fees, higher fees, or are getting refused credit altogether.

According to Moneyfacts.co.uk there have been around 125 increases in credit card rates and fees over the past couple of months. Credit card holders and applicants are now really feeling the effects of the credit crunch through the amount that they are being charged for using the card and in terms of whether they are even able to get a credit card, with wary lenders operating on far more stringent lending regulations in light of the volatile financial markets.

There are now concerns that rising credit card fees and charges could leave many consumers struggling to repay their existing debt, particularly given that interest rate rises have resulted in rocketing mortgage repayments for many households, leaving many already teetering on the financial edge. Experts state that these rocketing fees could add to the already sky high level of personal insolvencies in the UK, as consumers struggle to keep up with repayments.

Credit card providers have imposed charge and fee increased in a number of areas. This includes higher cash withdrawal charges, increased foreign transaction fees, higher standard interest rates, and increased balance transfer fees.

One industry official stated: "It seems as if the credit crunch is beginning to cause credit card chaos. With the majority of increases staying away from the headline purchase rates, these fee and rate increases are less in the public view, and often tucked away in lengthy terms and conditions. However, they can still make a substantial increase to the cost of using your card."

Tom Smith
23rd November 2007

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