Credit card providers are using a whole range of charges to make money from their customers, Which? Money warns today.
Last year the Office of Fair Trading (OFT) ruled in that credit card companies must cut the penalty fees they charge to a maximum of £12.
But since then Which? Money has found that other fees and charges have notably increased.
It highlights ten card stings to watch out for. These are:
- annual fees – some cards charge up to £24 a year
- low usage fees – customers who don’t regularly use their card may be charged penalties of up to £35
- balance transfer fees – the cost of switching a balance is rising, from a typical 2 per cent to 2.5 or 3 per cent
- lower minimum payments – so borrowers who only pay the minimum will pay more interest
- order of payments – some providers have changed the way they allocate repayments, so they start paying off the cheapest debt first
- interest calculation – the lowest APR does not necessarily mean the lowest interest, as there’s no standard interest calculation method
- cheeky charges – some card providers sting customers who don’t tell them they’ve moved house, by up to £12
- credit card cheques – the interest rate is often more than 20 per cent, there’s a handling fee and usually no interest-free period
- withdrawing cash – some providers have increased interest rates and fees for cash withdrawals
- gift vouchers – some cards treat gift voucher purchases as cash withdrawals, which attract a higher interest rate.
Which? Money Editor Martyn Hocking said: ‘Credit card providers seem to be resorting to a raft of ingenious methods to recoup lost revenue following the OFT crackdown on penalty fees.
‘To avoid being stung, opt for a Which? Money Best Buy credit card, and always check the small print to make sure you know what charges apply.’
The full ‘Ten steps to a cheaper credit card’ article appears in the September issue of Which? Money magazine.
The monthly magazine, which is available on subscription by ringing 0800 0321 177, also includes Best Buy credit cards.