Friday 2nd June 2006
A number of leading banks have slashed the penalty fees for their credit cards.
However, while HSBC, Barclays and Lloyds TSB have cut the charges to below £12, the banks are expected to compensate by increasing the interest rates for cash withdrawals, with Barclaycard already having made such a move.
The reduction in penalty fees from generally above £20 is in response to an Office of Fair Trading (OFT) report stating that the charges were excessive.
The charges are typically enforced on customers who exceed their credit limit or who miss or make late payments and are thought to make providers around £300 million each year.
"[Credit card providers] are unlikely to write off £300 million a year generated by the old levels of default charges," said Nick White, the head of uSwitch.com.
"We predict that consumers could see the APR on their credit cards being raised by at least two per cent and the reintroduction of annual fees."
In due course the OFT may deem the new APR charges unfair as well, although only a court can prevent banks from imposing the increases. 
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