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Sep 15, 2006
According to
uSwitch.com, the credit card industry may have resorted to increasing its other
fees and charges in response to the Office of Fair Trading’s decision to
illegalize penalty charges.
uSwitch.com claims
that companies have implemented reforms designed to compensate for the £300
million a year it is expected to lose from credit card charges. These include removing
the cap from balance transfer fees, increasing the actual balance transfer fee,
changing the order of repayments, increasing cash interest rates, increasing
cash advance fees and increasing the standard purchase APR.
“While the OFT’s
decision to force credit card providers to reduce default charges was
undoubtedly a victory for the nations’ 30.6 million credit card customers, the
card issuers’ responses elsewhere have not been so welcome,” says Nick White,
head of personal finance. “They are unlikely to write off the additional £300
million a year generated by the old levels of default charges. With this in
mind, consumers need to be even more alert when taking out a new credit card
not to be carried away with the headline grabbing rate, as it’s the underlying
charges that are a greater cause for concern,” he added.
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