Credit card charges need careful scrutiny
by Gill Montia
Story link: Credit card charges need careful scrutiny
The credit squeeze has led many credit card providers to increase fees.
According to research from Moneyfacts.co.uk, the money search engine, 125 fee and rate rises have been applied in the past two months.
Cash withdrawal fees have been increased on 69 cards; cash withdrawal rates have increased on 25 cards; foreign usage fees have risen on 18 cards; 10 cards have higher balance transfer fees and three cards have increased purchase rates.
Many cardholders will find that their provider has implemented a combination of increases.
Esther James, credit card analyst at Moneyfacts.co.uk, points out that with “the majority of increases staying away from the headline purchase rates, these fee and rate increases are less in the public view, and often tucked away in lengthy terms and conditions. However they can still make a substantial increase to the cost of using your card”.
She warns that as consumers take to the High Street for their Christmas shopping “incomes will be stretched to the max with more people perhaps turning to their plastic for access to additional cash, only to get stung by still higher rates and fees.”
In particular, withdrawing cash on a credit card can be very expensive as interest rates average 23%, and are charged from the date of withdrawal. Consumers can also expect to pay a fee of up to 3%.
In a worst case scenario, someone withdrawing £500 on a credit card and paying it back making only the minimum repayments (2.5%, min £5) would repay a total of £1,382.70.
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