Warning to credit card customers as lenders pass on higher borrowing costs
Sunday 11 November 2007
Credit card companies have put up more than 100 fees since September, the financial information group Moneyfacts says. Those relating to withdrawals from cash machines, the use of cards abroad and debt transfers from other cards have risen particularly steeply.
Moneyfacts lays the blame on the turmoil gripping international money markets. "It seems as if the credit crunch is beginning to cause credit card chaos," said Esther James, credit card analyst at the group.
Problems on the money markets have made it more expensive for banks to borrow off one another to pay for their credit card and mortgage offers.
"These fee and rate increases are less in the public view, and often tucked away in lengthy terms and conditions," Ms James warned. "However, they can still make a substantial increase in the cost of using your card."
Interest rates are also on the rise, Moneyfacts says. Since September, 13 card providers have raised their rates. Ms James advised consumers to check that their credit card is offering a competitive deal, and if it isn't, to switch: "There are still some great 0 per cent deals on purchases and balance transfers to be found."
Cardholders should not use their cards to withdraw cash, as the average rate of interest on these transactions is currently 23 per cent.
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