Banks say they intend to push up credit card charges
November 9, 2009
In an attempt to boost profits from credit cards the next couple of years should see banks increasing their annual charges and interest rates.
In a report published by PricewaterhouseCoopers, partner Richard Thompson warns that many of the U.K.’s thirty-one million credit card users could soon be finding it increasingly difficult to manage their debt. The move to increase charges is viewed by many to be a reaction to less people using plastic to pay for things. Some think that the recent economic downturn scared people off from running up debts they could not pay back.
The report points out that just a three percent increase in Average Percentage Rates on the average U.K. credit card debt of £2,000 would see a rise in interest payments alone of £60.00 per year. It goes on to say that a predicted increase in annual fees could mean that average credit card holder could be facing bills of £100 or more on top of what they already pay.
The PwC report says that the number of credit cards being used has dropped by eight percent in the last year. It also says that the amount being borrowed on our flexible friends has dropped by three percent.
Thompson said that as well as increasing their charges to credit card holders, banks are also likely to start refusing credit to more people. It is probably no coincidence that the banks announced these increases just as more people were declared insolvent throughout the U.K. last month than ever before.
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