Missed repayments netting millions for credit card providers

According to a recent report credit card companies are netting a fortune in extra profits as a result of consumers missing repayments.

With living costs rising, interest rates still high, and household finances overstretched, not to mention the reduced availability of credit, many consumers are experiencing severe financial strain at present, and this means that the risk of missing a credit card repayment is even greater, as consumers struggle to make ends meet and keep up with their debt repayments.

The report claims that in the last six months around five million cardholders have missed repayments, and each time a repayment is missed the credit card company charges £12, which is now the maximum fee that they are allowed to charge following a ruling by financial regulators in 2006. The number of people that missed repayments in the past six months reflected an increase of 2% compared to the previous six months, further reflecting the difficulties and financial strains that many people are having to deal with.

This means that the credit card companies have made over £60 million from missed payments alone by charging each of these millions of consumers £12. One industry expert stated that it was vital consumers avoid missing repayments, not just because of the charges applied but also due to other factors.

Missed payment are logged on the customer’s credit file, and can damage their credit rating, affecting their ability to get further credit, particularly in the current financial climate. There are also fears that some credit card companies and banks may follow Egg’s example, and withdraw the cards of anyone that they class as a higher risk.