Penalty charges on credit cards from three major banks are to be almost halved after calls from the Office of Fair Trading.
Barclays, Lloyds TSB and HSBC have said that they will reduce their charges from £20 to £12 by August, after the OFT accused banks of setting them at “too high a level”.
The action has been welcomed by the one of Britain’s largest debt charities, the Consumer Credit Counselling Service. Chairman Martin Hurlston argues that the current system penalises “too heavily” those already in debt.
"We have been worried for some time that the burden of sustaining the credit card system was falling too heavily on people in debt.
" Stealth pricing and the ravages of competition have led credit card companies to offer ever better deals to good payers while raising the fees and penalties faced by the minority.”
Credit card companies have been estimated to receive up to 43% of their income from penalty charges which are imposed for late payment and exceeding borrowing limits.
The Office of Fair Trading argued that credit card charges greater than £12 are unfair and has also encouraged banks to reconsider the levels of default charges on mortgages, overdrafts and store card contracts.
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