Credit card rises for problem customers
Published On 20 November 2006
There could be increases in credit card rates and interest charges for those consumers who consistently fail to pay their card balance on time, a financial watchdog has warned.Research company Defaqto has said credit card companies will most likely react to the regulatory squeeze being put on the industry by further targeting late paying cardholders.
The company says that credit card companies are increasingly looking to alternate sources of revenue given the recent decision by the Office of Fair Trading (OFT) to cap delinquent charges to a maximum of £12.
David Black, author of Defaqto's most recent report called Credit Cards in the UK – Protecting Margins, commented on the situation.
He said: "Annual fees will more likely be introduced for people who pay off their balance every month rather than for those who carry debts. Those who have debts on their cards are more easily targeted by an increase in interest rates.
"Some providers will impose a rate increase after one default while others delay such an imposition until the customer's defaults become more chronic. Given the £12 cap on charges, Defaqto expects some providers to choose this approach with some of their future credit card offerings."
