2 June 2006
Many of the UK's largest banks have cut the charges they impose when consumers miss or make late payments.
Barcalycard, Lloyds TSB and HSBC were among the institutions that cut their charges in reaction to the Office of Fair Trading's (OFT) investigation into the level of the penalty fees.
The OFT recommended that the level of these charges should be capped at £12, which would more than half some of the charges previously being levied against credit card users.
Yet there are worries that the cutting of charges will only lead to rising costs to customers elsewhere.
"While on the one hand this is a victory for the 28.56 million customers of these banks and a demonstration of the weight that the OFT carries, we are already seeing that the banks cannot afford to lose out on this money-spinner - which contributes to an estimated £2 billion a year in revenue," said Nick White, head of personal finance at price comparison and switching website, uSwitch.com.
"They are unlikely to write off £300 million a year generated by the old levels of default charges. We predict that consumers could see the APR on their credit cards being raised by at least 2% and the reintroduction of annual fees."
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