The Guardian - Credit card companies still raking it in despite £12 charges cap

The Office of Fair Trading's £12 cap on credit card charges, imposed a year ago, has not cost card providers a penny in lost revenue according to research by uSwitch and may even have helped the industry earn higher profits.

Higher average repayment rates, higher charges for cash withdrawals and higher fees on balance transfers put in place since the OFT ruling have netted the credit card companies at least £815m in new revenues or nearly three times the £300m lost from capping late payment charges at £12.

The research is a setback for the OFT, which is deciding whether to cap current account charges at £12 as well, and makes ominous reading for consumer groups that have championed the case for charge capping.

uSwitch said that since the £12 cap was imposed on credit cards, the average repayment rate for purchases has risen from 15.19% to 16.6%, while for cash withdrawals it has risen even more, from 20.37% to 23.01%. Balance transfer fees have also become standard practice, with rates rising from 2% to 2.5-3% of the amount transferred, while caps on maximum charges have been removed.

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