Credit Card Card Penalty Charges

According to a report by Moneysupermarket, 25% of credit card holders (10 million) have been subject to some penalty on their credit card; usually this is for late payment or going over their credit limit.

The OFT investigated Credit card companies last year and decided the penalties were disproportionately high. There is now a limit of £12 for penalty charges.

However, despite many customers facing regular fines, there is little enthusiasm for introducing monthly or annual fees for having credit cards. Therefore, these penalty fees are a way of making credit cards quite profitable for banks. Therefore, they are reluctant to lower them any more.

What do I do if I get a Penalty Charge on your Credit Card?

1. If you get a penalty charge for being slightly late or overdrawn, it will probably not count against you on your credit rating. Therefore, as soon as you realise you are late. Make a full payment so you don't incur a negative rating.
2. If it is your first late payment, it may be worth contacting your bank to explain that there was some misunderstanding or mix up with the post. They may agree to waiver the fee.
3. Set up a direct monthly payment, so that the minimum balance is always paid every month.

Lloyds TSB Credit Cards to have fees for no use

Lloyds TSB announced that credit card owners who do not use their credit cards will be charged £35. The argument is that by threatening to charge them it will encourage the use. Credit cards have set up costs, although it is perhaps hard to justify charging £35. Lloyds TSB recently announced it had made £3.7 billion profit.

about 1% of credit card owners do not use them. This scheme could make TSB over 1.5 milion in the next month alone. It could be as a consequence of the FSA'a crackdown over mortgage lenders and banks charging Exit fees.

UK Debt levels continue to rise in 2007

The UK is experiencing rising levels of debt. However evidence suggest the pattern of debt is shifting from credit cards to personal loans. The level of mortgaging lending continues to rise and remains by far the biggest type of borrowing. The increased value of houses has enabled more secure loans to be taken out against the value of the house.

Credit card companies have become increasingly picky about which customers to give cards to. This has reduced the number of bad debtors, it has also reduced the number of people with credit cards. The number has falled from over 11 million to 9.8 millionPayment default was a reason for Barclaycard reporting significant falls in profit, though it claims the worse is now over.

According to Euromonitor International, the average amount spent on credit cards fell for the first time ever. In 2005, the typical spend per person was £1,978 - but in 2006, it was £1,900.

Credit cards were traditionally seen as short term loans and it suggests people are getting wise to the high APR charged by credit card companies


See also: WHy debt has increased so much in the UK

What to Look for when switching Credit Cards

When getting a new credit cards there are certain things to look for to make sure you get the best deal.

1. Which is most important a low introductory rate or a low AVR?
2. How long is the introductory period (can range between 3 and 6 months)
3. Do you get points for spending? This is relatively insignificant unless you spend a lot on a credit card.
4. Can you apply and check balance online, most credit card companies offer this feature.
5. Do you have any adverse credit history, this will reduce the number of options that you have.
6. Are there any costs associated with balance transfers. It is becoming increasingly common for credit card companies to charge a balance transfer of 2-3%. It is hard to find a company who will do it for free.

Bank Gives Credit Card to a Cat

Just to prove that Banks are becoming increasingly flexible in their attitude to lending. An Australian Cat had the honor of receiving its own credit card. Needless to say Messiah the Cat was very excited about the prospect of buying unlimited stocks of premium Felix cat food...

The bank later apologised for issuing a credit card to the cat. Its owner Katherine Campbell applied on behalf of her Cat to the Bank of Queensland.

Sydney Reutersc

12 Month Interest Free Barclay Credit Card

I am always looking for good credit card deals to switch my balance over. If you are paying a standard credit card rate of 15% or more, you should definitely looking into switching it to a lower credit card deal.

Barclays have a credit card deal that offers 12 months interest free on balance transfers. This is a very good deal because it saves the hassle of changing every 6 months. There is a 2.5% handling fee, but that is quite low. It is effectively the same as borrowing a certain amount for an annual interest rate of 2.5% which is slightly less than the UK rate of inflation at 2.7%

Barclays

Avoiding High Credit Card debt Payments

Research by Money Supermarket suggests a missed credit card payment could cost upto £300.

It is increasingly popular for consumer to switch their credit card debt between different companies. This is something known as "Rate Tart" - always moving your debt to lowest interest payment. However if you miss a payment you could be automatically moved from the 0% introductory offer to the standard AVR, which could be upto 17%. ALso you may be charged a penalty for a missed payment. In order to avoid this it is best to set up a direct debit to pay minimum off each month and also try to pay some extra each month.