The Office of Fair Trading (OFT) has called for a cut in credit card operators’ charges after an investigation into the industry.
Comparisons reveal that almost all mainstream credit providers charge £20 to £25 for late or returned payments and issue financial penalties for exceeding credit limits.
In 2005, Defaqto found that one in five people had paid a penalty charge on a credit product and that late payments on credit cards were the main reason for the charges.
The OFT is petitioning credit providers to charge a limit of £12 for their penalty fees. While most consumer groups have welcomed this possibility, some advise that the lenders will recoup their losses from other charges.
“Somewhere in there banks have to try and make some money,” said Robert Kenley, Head of Credit Cards, Moneysupermarket.com, warning that “other fees (will) come onto the market.”
As well as zero per cent interest deals being under threat, standard interest rates for credit are also likely to rise. The banks have until May 31 to respond to the OFT’s recommendations.