In 2006 financial regulators in the UK reviewed the penalty charges that were being imposed on the accounts of credit card holders that made late payments or went over the agreed credit limit on the card, even if only by a few pounds.
In many cases these charges were set at around thirty pounds – sometimes more depending on the card issuer or credit card company. As a result of the review, financial regulators in the UK enforced a new rule that meant that banks and credit card companies in the UK could not charge more than twelve pounds in this sort of situation – a move that cost many card issuers and companies a fortune in lost revenue.
However, it seems that many banks are now trying to recoup the revenue that has been lost through the ceiling limits placed on these cards by finding other ways to try and get money out of card holders. They are doing this by pushing up the cost of making transactions through cash machines, charging customers huge amounts of interest for the privilege of using their card to withdraw cash from machines.
A spokesperson from the price comparison website Uswitch stated: ‘Consumers could be forgiven for thinking that they are being treated as the banking industry’s personal ATM. It’s easy to see why the major banks continue to announce record profits, which this year alone totalled in excess of £40bn, when the welfare of their customers continues to take a backseat to shareholders.’
According to Uswitch the amount of interest charged for cash withdrawals has rocketed recently, going from around twenty percent in 2005 to over twenty seven percent. Card issuers have also reduced interest free periods on credit cards.
Tom Smith
25th April 2007
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