Credit card fees reduced – how to avoid the rest

September 12, 2006

By Peter Kenny

Earlier this year in April The Office of Fair Trading (OFT) made a recommendation that credit card companies reduce their credit card penalty fees to a maximum of $12.

After some reluctance and argument most credit card suppliers agreed to reduce their penalty fees.

The OFT announced last week that all credit card suppliers have indeed agreed to reduce their credit card default fees, the majority by half.

Consumers are still faced with credit card penalty fees for late payments and unauthorised overdrafts. Even though the fees have been reduced to a maximum of £12, this is still a considerable amount to be charged.

Consumers should try and avoid these by following simple rules and guidelines.

Late Fees

Along with unauthorised overdrafts, late fees are probably the most common default charges applied to a credit card account. To avoid a late fee, a cardholder should think about setting up a direct debit agreement to pay their bill. Even by paying their bill using online banking can speed up the process. Consumers should try and avoid sending payments by mail

Unauthorised Overdrafts

Going into the red can cost an astonishing amount and that does not apply to the fee! Unauthorised overdrafts attract interest rates higher and more often than not, double the standard APR. This type of default charge is often linked to late fees and can easily be avoided by setting up a direct debit or by using an online banking service.

Some credit card suppliers are actively working with their cardholders to help them avoid credit card fees. Barclaycard must be commended for their initiative in sending out a text alert 5 days before a payment is due.