12 September 2006
uSwitch has calculated that the credit card industry was clearing £679 million in penalty charges each year.
However since the introduction of the £12 cap by the Office of Fair Trading (OFT), the price comparison and switching website now estimates this figure has dropped to £379 million.
Research by uSwitch has also revealed that credit card companies are trying to recover the £300 million lost through stealth charges such as balance transfer fees, cash advance fees and amends to order of repayments. In fact, 26% of credit card customers incurred penalty charges last year.
Nick White, uSwitch head of personal finance, said: "While the OFT's decision to force credit card providers to reduce default charges was undoubtedly a victory for the nation's 30.6 million credit card customers, the card issuers responses elsewhere have not been so welcome."
He concluded: "With this in mind, consumers need to be even more alert when taking out a new credit card package, that they don't get carried away with the headline grabbing rate, as it's the underlying charges that are a greater cause for concern."
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