Credit Card Charges

Which? has discovered a game easier than shooting pigs in a barrel, that of criticising the charges made by credit card companies on their hapless customers.

Which? state that since the Office of Fair Trading (OFT) ordered a cut in default fees to £12 last year, "ingenious methods" had been used to recoup the income.

Needless to say the banking industry has denied that is is acting unfairly, and claims that different fees were inevitable after the OFT ruling.

True enough, if they want to maintain their very high levels of profits.

Which? highlighted a number of money making charges levied by the card companies, including:

-Low usage fees
-Raised interest rates for withdrawing cash
-Annual fees for having a card
-Fees for using cards abroad
-Shorter interest free periods

Martyn Hocking, editor of Which? Money, said:

"Credit card providers seem to be resorting to a raft of ingenious methods to recoup lost revenue following the OFT crackdown on penalty fees."

Sandra Quinn, of the UK payments association Apacs, retorted:

"We always said that charges would change as a result of the OFT ruling.

We have been much more upfront about how charges are applied - every statement now has a summary box listing charges and key information about charging."

The latter part about being "more upfront" is particularly amusing, as it implies that credit card companies tried to hide their fees before!

Why would they do that then?

The credit card industry is also in trouble in respect of its many and varied methods for calculating the annual rate of interest (APR). Which? claim that there are at least 12 different methods in use for calculating an APR.

Following a complaint from Which? in April, the OFT said it would investigate the issue.

As I have noted before, banks are not charities. They are in business to make money, when one avenue for making money is closed they will find another. They treat their customers in this way because they know that they can get away with it, and know that many of their customers are so deeply in debt that they think that they need a credit card just to keep their heads above water.

In order to avoid these charges:

1 Pay off your credit card in full each month

2 Dump those cards that have an annual fee or low usage fee