June 1, 2006

By Peter Kenny

Barclaycard issued a statement yesterday, in response to the conclusions on credit card penalty fees set out by the Office of Fair Trading (OFT) back in April this year.

The OFT found that the penalty charges levied by banks and credit card companies on customers for late payments, bounced cheques and unauthorised overdrafts were excessive. It gave banks and credit card companies until May 31st to reduce these charges to an acceptable level of £12 per transaction. Yesterday Barclaycard, Lloyds TSB and HSBC announced they would be reducing their late payment fees to £12.

In yesterdays statement, Barclaycard has strongly disagreed with the OFT’s legal  analysis and conclusions, however, they have decided to reduce their late payment penalty fees to £12 in order to remove any uncertainty for Barclaycard customers.

Their change in penalty fees will take place on August 1st. Barclaycard will be writing to all of its customers with details of the fee reduction. The company also stated that many people would benefit from this fee change.

Barclaycard have also announced that in conjunction with the late payment fee reduction they will also be increasing the rate of interest for customers who use their credit card for cash advances from 21.9% to 27.9%. Some Barclaycard holders will also find that their standard APR for purchases will also increase by between 2% and 5%. Barclaycard did not indicate how it proposes to decide which credit card holders will incur the higher interest rates.

Barclaycard also stressed that in March this year it launched a new text alert service for its cardholders, reminding them that their monthly payment is due. The service is free to all Barclaycard credit card holders and can also be used to move the customers billing day to one that suits their monthly budget.