I heard on the radio this morning that the credit card companies, being so hard done by and unable to scrape together a profit, want to return to charging an annual fee for their services. These being lending money at exorbitant rates of interest – unless the customer pays in full each month, which is hardly the done thing. Bankers have to eat, you know…
Annual fees for having a credit card could be on the way back, a study by PricewaterhouseCoopers (PWC) says.
The fees, which fell out of fashion in the late 1990s, could make a comeback as card providers try to recoup losses from new consumer protection measures.
The Office of Fair Trading’s (OFT) cap on credit card default charges and its payment-protection insurance probe has hit card providers’ incomes.
Losses, eh? Well, I can’t feel too concerned about it. After all, they are all too willing to fleece the consumer with over high charges, so having to pay them back is not such a bad thing. Unless you are a credit card company, of course. Now is the biter bit, it seems.
Still:
Fees of £35 would have to be levied to make up their losses, PWC said.
Ah… That would be the £35 they lifted from their customers’ wallets for defaulting and had to pay back, would it? I’m fortunate, I haven’t lost money in this way. That’s because I set up direct debit payments for the minimum amount each month, thereby insuring myself against such fines should I have a senior moment and forget the payment date. If, however, I’m to be clobbered by an annual fee, then I’ll be rethinking my arrangements. At present, I have four credit cards. I don’t know why, I just sort of collected them over the years. My Amex Blue Card already has a small annual fee that is more than offset by the money back I get each year; so effectively it’s cost neutral. I use it for business expenses, so will keep that one. The Barclaycard I use for personal day-to-day expenses. That leaves my two MBNA cards. One is issued by the British Motorcyclists Federation and they get a proportion of the money MBNA collect in fees from merchants. The other was originally an Abbey National credit card until MBNA took over the operation. Now, are these two cards worth seventy quid? No. So they will go. Now, multiply that reaction across the credit card owning population as people dispose of excess cards and any gains made by the companies might well be lost as people decide that that fashionable idea of the early nineties wasn’t such a bad thing after all.