February 10, 2006

It has been reported that a third of all consumers who have a credit card pay late payment penalty fees.

Over the last few months credit card companies have been increasing charges for their in order to make up for the losses they make on issuing 0% credit card deals.

A recent survey by Moneyfacts has found that over a third of consumers incurred a late penalty payment fee in the last 12 months, which averaged out at £25. As most credit card balances hover around £2000 this £25 penalty fee doubles a consumers interest payment for that month. What also compounds the problem is that interest is also applied to the late payment penalty fee!

The Office of Fair Trading have recently launched an investigation into these fees and are asking credit companies and banks to justify them.

It is estimated that last year Banks and credit companies made over £500 million through late payment fees and interest on unauthorised overdrafts.