Banks try and make up for capped credit card penalty fees

Over recent months banks and credit card companies in the UK have come under intense fire for many reasons. Last year, as the result of credit card companies and banks imposing hefty unfair charges by way of penalties on credit card accounts.

The UK financial regulatory services placed a cap on the amount that could be charged by way of a penalty on credit cards, placing the ceiling limit at twelve pounds per charge.

And according to recent reports, banks have now found a way to try and some of the losses that have occurred as a result of this ceiling limit being imposed. According to the latest data, banks have been pushing up the cost of using credit cards in cash machines, and as a result of this have netted millions of pounds in extra revenue from customers that are being charged hefty amounts of interest for the privilege of withdrawing cash on their credit cards.

The study was carried out by the comparison website Uswitch.com, and the figures indicate that from an interest rate of just over twenty percent APR in 2005 for cash machine withdrawals on credit cards, the APR has now risen to over twenty seven percent for the same transactions. And to make matters even worse, banks have also been found to have reduced the interest free periods on credit cards in many cases, further increasing the amount of money they can make from each credit card holder.

Tom Smith
23rd March 2007