April 18, 2006

By Julie Ann Amos

The world of hit both the soft and hard ground recently with some interesting change of trends, official announcements, thought provoking insights, useful warnings and many more.

To begin with, the EU dealt a strong hand with credit card firms to cut down their “outrageous” fees. Neelie Kroes, the EU competition commissioner has stated that the consumers and small firms are bearing the brunt of the high rate of fees. Highlights Ms. Kroes, “I am not against profit, which is vital to innovate and invest, but competition is missing.” Interestingly, just a week before the UK’s Office of Fair Trading had issued an ultimatum to banks to cut their fees by more than half or face legal action.

The consumer thus heaves a sigh of relief from the exorbitant fees and can probably now consider increased use of their plastic money.

While the credit card firms and banks struggle to come to terms with the stern orders from EU, Sainsbury’s Bank has set a record of sorts by launching the longest running zero per cent credit card for purchases within the UK. The consumer will not be incurring interest for as long as 12 months in this offer.

Meanwhile, the revenue figures of the credit card firms have come under a severe threat as the OFT (Office of Fair Trading) plans to limit the amount that the firms can charge as late-payment fees. There is perhaps a possibility to limit the fees to a mere £12 against the current £20 or £25. The credit card firms may also decide to scrap the zero percent deals altogether in the light of this announcement.

This declaration by the OFT has been warmly welcomed and applauded by the Consumer Credit Counselling Service (CCCS) calling this as a relief from the inequality in the previous status quo. States Malcolm Hurlston, the chairman, “We have been worried for some time that the burden of sustaining the credit card system was falling too heavily on people in debt while most of us were happy to enjoy a free service at their expense.”

Continue to Part 2

The Month That Was March 2006 Part 1
The Month That Was March 2006 Part 2
The Month That Was March 2006 Part 3