Starting from the end of this month, Barclaycard, HSBC and Lloyds TSB will reduce charges for not repaying debt from £20 down to £12.
“We expect credit card issuers to adjust their default fee levels quickly,” said OFT chief executive John Fingleton.
However, he warned that providers who had not lowered their fees should expect to hear from the OFT soon: “We have not ruled out future legal action if the market does not respond positively.”
The three providers who have lowered fees will do so from the end of this month, but it comes with a warning that interest rates may rise to cover the loss of part of the £300 million made from late payment fees.
Nick White, head of personal finance at price comparison website uSwitch.com said that card holders can expect the rate to rise by at least two per cent, or even see the return of annual fees.
Barclays, one of the banks that has lowered its late payment fee for credit card debt, has already raised the rates it charges and others may follow soon.