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?
- 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.
- 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.
- Set up a direct monthly payment, so that the minimum balance is always paid every month.