Thrifty Loans

A warning has been issued to be on your guard against hidden credit card fees as information emerges that such actions are on the increase.

Research shows that 1 in 8 card companies have at least one card within their range which carries an annual fee, with some even reaching a staggering £275 per annum!

MoneyExpert.com conducted this research and believe that we could see the introduction of more cards carrying fees as banks/lenders attempt to combat falling profits-due in part to the reduction in illegal charges banks were able to impose and the growing number of defaulting customers. Both of these have hit the banks hard.

Morgan Stanley and the Co-operative bank have announced their intentions to introduce a fee. Lloyds TSB will apply a £35 annual charge to their customers who do not use their cards regularly. Morgan Stanley’s fee is £20 and is applied on its Black cashback card, which in effect cancels out the ‘cashback’ benefit for a percentage of its customers. Also, MBNA say they will charge customers who keep a ‘credit’ balance on their credit card accounts.

MoneyExpert’s chief executive Sean Gardner says, “The rising tide of bad debt hitting banks and other credit card firms is forcing providers to tighten their belts and think of new ways to make money.”

Like many others he believed we’d seen the back of credit card fees, but now he expects them to return ‘sooner rather than later’. When credit card companies are under pressure to improve profits and reduce bad debts, then they naturally look towards customers, some of whom will be prepared to pay for credit.

These companies are trying to soften the blow of introducing fees by offering ‘perks’ like free travel insurance or the like, in an attempt to justify the cost.

Overall, it would appear that there will be a growing trend of fees applied to credit cards-especially in the instances where cards are not being used often enough or remain active for considerable periods of time.