Charges spell end of the plastic party
Sunday 19 November 2006
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.
- 1 Michael Brown shooting: Amnesty International sends team within US for first time as National Guard deployed
- 2 James Foley 'beheaded': Isis video shows militant with British accent 'execute US journalist' – and warns Obama of more to come
- 3 Reading Festival 2014: Tesco branch replaces salad and potatoes for Jagermesiter and vodka
- 4 Here’s the damning letter Robin Williams wrote to his Mrs Doubtfire co-star's principal after they expelled her
- 5 Ferguson protests: 90-year-old Holocaust survivor Hedy Epstein ‘arrested’ by police during St Louis demonstrations
Isis threat: Cameron wants an alliance with Iran
Crisis? What crisis? A visiting US doctor gives the NHS a rave review
Ukip MEP calls for reintroduction of death penalty on fiftieth anniversary of last deaths
Russell Brand calls for Israel boycott: Comedian urges big businesses that 'facilitate the oppression of people in Gaza' to pull funding
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
World peace? These are the only 11 countries in the world that are actually free from conflict
iJobs Money & Business
£200 - £290 per annum + competitive: Orgtel: Sales Performance Manager, Key Ba...
£25000 - £30000 per annum + bonus+benefits+package: Harrington Starr: Junior D...
£600 - £800 per day: Harrington Starr: Java/Calypso Developer Java, Calypso, ...
£700 per day: Harrington Starr: Quantitative Developer C++, Python, STL, R, PD...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony