The Times - Stealth charges boost credit card profits

Credit card companies have made millions of pounds in extra profits since the OFT imposed a £12 cap on late-payment charges.

Credit card companies have made millions of pounds in extra profits since the Office of Fair Trading (OFT) imposed a £12 cap on late-payment charges, this time last year, by craftily hiking interest rates and balance transfer fees.

Firms are generating an extra £815m a year from the various ploys or nearly three times the £300m lost from capping late payment charges, according to research by uSwitch, the online comparison site.

Nick White at uSwitch said: “Credit card providers have squeezed every last penny out of consumers to recover the lost millions and have more than recovered it over the last year. Over the last 12 months consumers have been inundated with extra fees and charges.”

Since the £12 cap was imposed, the average interest rate for new purchases has been hiked from 15.19 per cent to 16 per cent. For cash withdrawals the rates have risen from 20.37 per cent to 23.01 per cent.

Balance- transfer fees have also gone up to punish savvy consumers who regularly switch their card balances to cheaper deals. Typical rates have risen from 2 per cent to 2.5-3 per cent of the amount transferred, and caps on maximum charges have been removed.

These are the most blatant changes but providers have also introduced a range of sneaky charges that customers may have missed.

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