"Credit card holders could face annual fees" - The Guardian

pin

http://www.guardian.co.uk/uk_news/story/0,,1641959,00.html

However I think its just journalism gone a bit enthausisatic (sp?)

Amba_Gambla

I think that's almost a mini-victory for all those card tarts out there!!!

daveboy

I've just seen this on the BBC news site.

I've thought it only a matter of time before they go back to this as too many people play the 0% game now. Once one tests the water, the others will follow.

I think it'll either be MBNA or Barclaycard that go first.

Milarky

It would be sloppy however to do this. Tarts are the minority - if companies wanted to do something about the losses there they can address that more directly [through transfer fees, for instance] A better approach [me thinks] would be to shorten the 0% offers without a fee [look a the reverse happening with 12 months offers but with 2% fees - they could offer 2% pa instead and they'd still be losing money on this]. No fee and the customers will come along to 'rate tart'. 4 months instead of 9 [or 6] at 0% and the customer won't have cleared any of the debt and will either have to stay and pay or just up stumps and try to move. More frequent moves are bad for credit rating, so more chances of rejection. Even if successful, moving debt more often moving would be harder to stick to and more and more 'gaps' would occur between the ends of these short offers and the commencment of new ones elsewhere.

If you think about 'fees' from the card company angle, however, they provide some certainty of income - as 0% lending must wreak havoc with the average lending rate on their loan 'book'.

Thefunkygibbons

This is picking up on a PWC report, the suggested fee is £25 per year

I thinking they are flying a kite to see how loud the complaints are

Personally, I think the first to do it will take a kicking

King_Of_Fools

Card Firms 'May Bring In Yearly Fees'

http://www.ananova.com/business/story/sm_1610448.html?menu=

Consumers are likely to face annual fees on their credit cards as issuers struggle to make profits in the face of "rate tarts" and bad debtors, a report has warned.

Credit card companies' margins have been hit by a combination of rising credit losses, increased regulation and people constantly shifting outstanding balances, according to PricewaterhouseCoopers.

The group estimates these so-called rate tarts have cost the industry around £600m in lost revenue on balance transfers.

It says this is despite the fact that many providers have introduced 2% balance transfer fees.

PwC also said people entering into Individual Voluntary Arrangements, under which interest on debt is frozen in exchange for the person agreeing to repay a set amount each month, now owed an average of £60,000 to 11 different creditors.

The amount of unsecured debt consumers owed, including credit cards and loans, had risen by 8.4% during the 12 months to the end of June to around £189bn, according to the group.

It expects this to increase further to around £200bn by June next year.

But while credit card debt had increased significantly during the past five years, it said the number of cards in issue had also risen by a similar amount, leading to little movement in overall card balances.

At the same time PwC estimates that revenue per card, after defaults but before fees, is likely to have halved due to competitive pressures and increasing bad debts.

It predicted that, as a result, companies were likely to reintroduce annual fees on cards as they tried to claw back some money.

King_Of_Fools

Thefunkygibbons wrote:

This is picking up on a PWC report, the suggested fee is £25 per year

I thinking they are flying a kite to see how loud the complaints are

Personally, I think the first to do it will take a kicking

MBNA are already testing the water.

supert3d

Yeah! i just picked this up on the BBC as well. :-(

http://news.bbc.co.uk/1/hi/business/4159400.stm

cifpower

This was discussed on Working Lunch. PWC rightly predicted the introduction of balance transfer fees 3 or 4 years ago so they have a good track record. Barclaycard and CapOne said they would not introduce annual fees. MBNA already charge 40,000 of their customers fees of £15-£25. This will more than likely be extended.

nitrocat

No way am I going to subsidise the banks so that they can continue to be reckless by lending money to bad risks.
You credit card companies out there - do you hear this. No custom from me if you try to charge me an annual fee so that you can continue to take bad risks by lending it to those who cannot manage money sensibly. I hope the people and government don't agree to bail you out either. Looters.

isasmurf

Anyone getting that deja-vu feeling?

BBC News: 1 November 2004