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Credit cards `more expensive since OFT legislation`
18/04/2008
Credit card customers have been paying higher fees and interest rates since default charges on cards were capped by the industry regulator two years ago, a new report has uncovered.
The Moneyfacts study found the average purchase rate on a typical credit card has risen from 14.9 per cent to 16.4 per cent, as banks attempt to recoup losses incurred from the ruling.
In 2006, the Office of Fair Trading forced banks to reduce the vast majority of their credit card default fees to £12, in response to debt problems being linked to spiralling charges.
Moneyfacts` Michelle Slade said that borrowing on credit cards has always been "expensive", especially as interest is often charged from the first day.
She added: "But with the 6.2 per cent increase in the average rate for customers who are relying on cash advances to balance their monthly budget, it will make a bad situation even worse."
