Credit card charges – more issues to address

The Government white paper detailing a review of the credit card industry is a great start but it doesn’t go far enough – what about other credit card charges such as cash withdrawal fees, balance transfer fees and overseas transaction costs?

The credit card industry review launched by the government includes the ban of unsolicited credit card cheques and an investigation into

• the order of repayments
• minimum repayments
• increasing fees and charges and
• increasing credit charge limits without the customer’s permission.

However, as a uSwitch.com review highlights there are further credit card charges that need to be addressed that currently cost each credit card cutomer an average of nearly £30 a year.

Credit card cash withdrawal fees

Major credit card providers charge up to 32% APR for this, almost double the average 17.69% APR on purchases

The biggest issue, as highlighted by uSwitch, is that many people don’t know how much it costs and over 10% think it’s the same as a debit card withdrawal.

Balance transfer fees

These are used by credit card suppliers to raise revenue when offering 0% balance transfer deals.

The average balance transfer fee is 2.93% and costs £1,846 for the average balance transferred.

Interestingly we are seeing an introduction of life-time balance transfer interest rates with no transfer fee.

For example, there’s the new Egg World Money credit card which has a life of balance interest rate of 8.9% and no balance transfer fee.

Overseas transaction costs

Using credit cards to buy goods and services overseas can be a costly exercise as charges levied include

• an exchange rate loading fee for each transaction of 2.75% and
• a currency conversion charge of around 4% if the retailer converts the transaction to sterling.

It may be worth considering a prepaid currency card for your holiday travel money.

As Louise Bond of uSwitch comments, ‘There are still some great credit card deals around so consumers should spend some time hunting down the next best deal. High fees and charges for specific practices do no impact every single credit card customer as they may not use every facility on offer. However, for those that are struggling financially, every provider has a different charge for every facility they offer so it’s still worth finding the cheapest provider for your individual needs.’