Charges spell end of the plastic party

For years, the sun has shone on credit card holders. With providers battling for market share, consumers have benefited from lengthy interest-free deals, cashback and competitive annual percentage rates (APRs).

But that could be about to change. According to Precious Plastic 2007, a new report from accountants Pricewaterhouse-Coopers (PwC), we could soon all pay an annual card fee as lenders struggle to recoup lost income.

In recent months, the industry has come under unprecedented scrutiny from the Office of Fair Trading (OFT), the Competition Commission and the Financial Services Authority, the report says. September's decision by the OFT to cap penalty charges on missed payments at £12 is already affecting margins.

The report adds that the continuing investigations into payment-protection insurance and credit card interchange fees - the charge paid by retailers on card transactions - may add to the pressure.

PwC predicts that the combined effect of these rulings and probes could be losses to the industry of £1bn. This, it says, is likely to lead to a "water- bed effect" where charges pushed down in one area pop up somewhere else.

According to the report, card issuers would have to levy annual fees costing the average user £35 a year - or raise annual percentage rates (APRs) by two percentage points on average - to offset this lost revenue. "Ultimately, regulation could hasten the return of annual charges as the norm," warns PwC spokes- man Richard Thompson.

Karen Darby from price- comparison service Simply- Switch warns that it is "only a matter of time" before providers try to recoup their losses by charging just for using a card.

In fact, the trend is well under way.

Lloyds TSB recently launched its Premier Amex card - offering a range of benefits for Premier current account customers - with a £4.95 monthly fee.

And earlier this month, the Co-operative Bank announced that its Platinum Base Rate Tracker and Northern Rock Base Rate Visa cards would carry a £2 monthly fee for both new and existing customers.

Michelle Slade at financial analyst Moneyfacts, says card firms have reacted in other ways, too. "In the three months since the OFT intervention, we found 19 providers have increased interest rates by an average of 2.5 percentage points.

"The OFT ruling has left a legacy of rate rises, fee increases and now the possibility of annual fees," adds Ms Slade.

Travel
travel
Sport
football
News
Tim Vine has won the funniest joke award at the Edinburgh Festival 2014
peopleTim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
News
Jamie and Emily Pharro discovering their friend's prank
video
PROMOTED VIDEO
News
people
Arts and Entertainment
tv
Life and Style
techApp to start sending headlines, TV clips and ads to your phone
Arts and Entertainment
Taylor Swift crawls through the legs of twerking dancers in her 'Shake It Off' music video
musicEarl Sweatshirt thinks so
Life and Style
tech
Arts and Entertainment
Daniel Radcliffe and Zoe Kazan in What If
filmReview: Actor swaps Harry Potter for Cary Grant in What If
News
Our resilience to stress is to a large extent determined by our genes
science
Travel
travel
Sport
sportBesiktas 0 Arsenal 0: Champions League qualifying first-leg match ends in stalemate in Istanbul
News
Pornography is more accessible - and harder to avoid - than ever
news... but they still admit watching it
Arts and Entertainment
The eyes have it: Kate Bush
musicKate Bush asks fans not to take photos at London gigs
News
i100
Extras
indybest
Sport
Manchester United are believed to have made a £15m bid for Marcos Rojo
sportWinger Nani returns to Lisbon for a season-long loan as part of deal
News
news
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Sales Performance Manager, Gloucester - £290 p/day

    £200 - £290 per annum + competitive: Orgtel: Sales Performance Manager, Key Ba...

    Junior Database developer (SQL, T-SQL, Excel, SSRS, Crystal rep

    £25000 - £30000 per annum + bonus+benefits+package: Harrington Starr: Junior D...

    Java/Calypso Developer

    £600 - £800 per day: Harrington Starr: Java/Calypso Developer Java, Calypso, ...

    Quantitative Developer

    £700 per day: Harrington Starr: Quantitative Developer C++, Python, STL, R, PD...

    Day In a Page

    Ferguson: In the heartlands of America, a descent into madness

    A descent into madness in America's heartlands

    David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
    BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

    BBC faces corruption allegation over its Sir Cliff police raid coverage

    Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home
    Lauded therapist Harley Mille still in limbo as battle to stay in Britain drags on

    Lauded therapist still in limbo as battle to stay in Britain drags on

    Australian Harley Miller is as frustrated by court delays as she is with the idiosyncrasies of immigration law
    Lewis Fry Richardson's weather forecasts changed the world. But could his predictions of war do the same?

    Lewis Fry Richardson's weather forecasts changed the world...

    But could his predictions of war do the same?
    Kate Bush asks fans not to take photos at her London gigs: 'I want to have contact with the audience, not iPhones'

    'I want to have contact with the audience, not iPhones'

    Kate Bush asks fans not to take photos at her London gigs
    Under-35s have rated gardening in their top five favourite leisure activities, but why?

    Young at hort

    Under-35s have rated gardening in their top five favourite leisure activities. But why are so many people are swapping sweaty clubs for leafy shrubs?
    Tim Vine, winner of the Funniest Joke of the Fringe award: 'making a quip as funny as possible is an art'

    Beyond a joke

    Tim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
    The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

    The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

    Sadly though, the Lawrence of Arabia star is not around to lend his own critique
    Wicken Fen in Cambridgeshire: The joy of camping in a wetland nature reserve and sleeping under the stars

    A wild night out

    Wicken Fen in Cambridgeshire offers a rare chance to camp in a wetland nature reserve
    Comic Sans for Cancer exhibition: It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans

    Comic Sans for Cancer exhibition

    It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans
    Besiktas vs Arsenal: Five things we learnt from the Champions League first-leg tie

    Besiktas vs Arsenal

    Five things we learnt from the Champions League first-leg tie
    Rory McIlroy a smash hit on the US talk show circuit

    Rory McIlroy a smash hit on the US talk show circuit

    As the Northern Irishman prepares for the Barclays, he finds time to appear on TV in the States, where he’s now such a global superstar that he needs no introduction
    Boy racer Max Verstappen stays relaxed over step up to Formula One

    Boy racer Max Verstappen stays relaxed over step up to F1

    The 16-year-old will become the sport’s youngest-ever driver when he makes his debut for Toro Rosso next season
    Fear brings the enemies of Isis together at last

    Fear brings the enemies of Isis together at last

    But belated attempts to unite will be to no avail if the Sunni caliphate remains strong in Syria, says Patrick Cockburn
    Charlie Gilmour: 'I wondered if I would end up killing myself in jail'

    Charlie Gilmour: 'I wondered if I'd end up killing myself in jail'

    Following last week's report on prison suicides, the former inmate asks how much progress we have made in the 50 years since the abolition of capital punishment