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The number of credit card companies charging fees has increased recently, and consumers have been advised to keep an eye out for them.
Annual fees are now charged by one in every eight companies on at least one of their cards. Charges can be as high as £275 per annum. It is forecast that fees on credit cards will become more commonplace as companies struggle in the face of reducing profits.
Recent campaigns have led to a Government clampdown on penalty charges levied by banks of consumers; this has led to a decrease in revenue, and profits have also been dented by an increase in the number of customers who have defaulted.
The most recent fee introductions have been by Morgan Stanley and the Co-operative bank. Morgan Stanley now has a £20 fee on its Black cashback card, thus erasing the cashback benefit for many customers. Lloyds TSB have said that they will charge customers £35 a year if they don’t use their cards regularly. MBNA have also said that they will charge customers with a positive balance on their cards.
Most cards that charge a fee to date come with some kind of additional service, such as free travel insurance, but now charges are being introduced as penalties against low usage. If you don’t use the card, they’ll make you pay just to own it.
The high fee of £275 is charged by Morgan Stanley on their 124 card, which conveys concierge service, travel insurance and 1% cashback on purchases to the owner.
There are two cards charging £120 per year: Co-op’s Life Gold Visa and the American Express Premium Plus card from British Airways.
Card providers are having to think of new ways to make money. Annual fees were introduced some years ago, and faded away, but evidently have not died. The pressure is on to reduce bad debts and improve profits, and customers may have to pay for credit privileges.