Firm issues credit card fees warning

Profit-seeking credit card firms might be planning to charge customers a fee to use their products, PricewaterhouseCoopers (PwC) has warned.

A new study from the accountants says that the current slowdown in the economy could cause the cash-strapped firms to levy the annual fees, the Press Association reports.

This effectively means that owning a credit card will no longer be free.

Card firms generally get their profits from interest charges on card debt and through add-on products such as Payment Protection Insurance (PPI).

However, PwC''s report suggested that, providers could look for other ways of making money if the Competition Commission''s proposed ban on selling PPI alongside cards is enforced,

Spending has been hit by the economic downturn and the Bank of England''s recent slashing of interest rates has also hit credit card repayment rates – both factors that have affected the amount of money the card firms can make through interest charges.

Richard Thompson, partner at PwC, said: "Conditions remain extremely tough for lenders in the current market and, in particular, our findings… indicate the prospect of rising levels of charge-offs in the UK market as the recession takes its toll.

"We expect that any reductions in APRs… will lead issuers to carefully consider the introduction of annual fees."