David Prosser: Amex sends a warning
Friday 28 August 2009
Outlook Here's a worrying straw in the wind from the credit card industry. American Express is to introduce a £20 charge for cardholders who haven't used their plastic during the previous 12 months (known as dormant accounts in the business). It's not unprecedented – Lloyds and Santander have similar fees – but it's another sign that all is not well in the credit card sector.
Rising bad debts and increasing fraud are taking their toll on lenders. A lucrative source of income was also cut off a couple of years ago when regulators effectively capped the charges that may be levied on credit card accounts if payments are missed on spending limits exceeded. It's also the case that more people are trying not to spend on plastic. So while lenders are still having to set aside capital to cover everyone's account, revenues are diminishing.
Amex's charge will be easy enough to avoid. Just use your card occasionally, even for the smallest of transactions. Or cut it up and switch to a different lender. Still, this is a warning sign: the days when credit card providers were battling for borrowers' business are long gone. The total cost of borrowing, despite a record low in Bank of England base rates, is only heading one way.
- 1 Tamir Rice: 12-year-old boy playing with fake gun dies after being shot by police in Ohio park
- 3 Woman opens professional cuddling shop – gets 10,000 customers in first week
- 4 Naked free runner captured in breathtaking photographs above London's streets
Turkish President: 'Equality between men and women is against nature'
Tamir Rice: 12-year-old boy playing with fake gun dies after being shot by police in Ohio park
Heroin to be prescribed to Canadian addicts by doctors
Audacious North Korean kidnap plot foiled at Paris airport as 'Asian men' attempted to bundle student onto plane
Revealed: the case against Bill Cosby – through the stories of his accusers
Rochester by-election: Ukip gains second MP as Tory defector Mark Reckless holds seat
'Beast of Bolsover' Dennis Skinner takes Ukip MP Mark Reckless to task moments after he is sworn in
Rochester by-election: Labour MP Emily Thornberry resigns after posting white van and England flags tweet
The young are the new poor: Sharp increase in number of under-25s living in poverty, while over-65s are better off than ever
France 'blocks' Russian sailors from boarding a warship
Green Party Caroline Lucas interview: 'We could be on the edge of something very big'
iJobs Money & Business
Negotiable: Argyll Scott International: Hi All, I'm currently recruiting for t...
£50000 - £60000 per annum + benefits: Argyll Scott International: A Business A...
£30000 - £35000 per annum + benefits: Ashdown Group: PR Marketing & Events Exe...
$80000 - $110000 per annum, Benefits: Bonus and Employee Investment Scheme: Se...