Credit fees on the rise
Several credit card companies operating in the UK have raised a number of charges in the past few weeks, according to new information from Moneyfacts, the online financial comparison service. It named several credit card issuers as introducing higher charges, including Lloyds TSB (LSE: LLOY), Northern Rock (LSE: NRK), Nationwide, Marks & Spencer (LSE: MKS), GE Money (NYSE: GE), and Co-operative Bank. Moneyfacts says that the increases in charges are the companies’ response to last year’s Office of Fair Trading ruling that cut default fees to £12. Changes include increases in interest rates and cutting short interest-free offers.
Moneyfacts pointed to a new requirement from Lloyds TSB as particularly unsavory. In order to be able to take advantage of a 0 percent balance transfer offer, Lloyds is now requiring customers to charge a minimum of £100 on their card within the first three months of issuance. There is an interest charge of either 15.9 percent or 17.9 percent on that purchase, which is not paid off until the transferred 0 percent debt has been paid off. Lloyds justified the new requirement by saying that the terms are “very clearly” explained in its disclosure material and that the required purchase was interest free for the first three months.
Lloyds is not the only credit card issuer to introduce new fees, however, nor is its new policy on transfers its only new fee. Last month it introduced an annual charge of £35 to customers who do not use their credit cards enough. HSBC (LSE: HSBA; Euronext: HSBC; NYSE: HBC; SEHK: 005) recently announced that it will charge higher interest rates to customers using their cards to finance gambling. And almost all cards offering 0 percent balance transfers have begun charging a transfer fee, usually around 3 percent.