Credit card lenders recoup losses

Fri, 09 Nov 2007

A new report has indicated that credit card providers are introducing new charges to recoup the losses made following the cap placed on default payments by the Office of Fair Trading last year.

Defaqto claimed that in June 2006, the average fee for a late payment on a credit card bill stood at £22.21, which has now fallen to £11.81.

However, the company stated that many providers have looked to mitigate this loss of income by increasing interest rates and other charges, while some have chosen to invent new fees.

David Black, Defaqto principal consultant of banking and author of the report, said: "Credit card providers have lost a great deal of highly profitable revenue because of the charges cap and will inevitably seek ways to replace their lost income."

Credit cards are likely to become more expensive over the medium-term, he warned, suggesting that sub-prime lending crisis has placed additional pressure on providers.

Martyn Saville, spokesperson for Which?, recently said it is "essential" that people choose a credit card than suits their individual needs.
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