Card issuers may return to charging annual fees in the near future, according to a report from PriceWaterhouseCoopers (PWC).
The company said that the use of interest-free balance transfers and initial purchase deals meant that revenues from credit cards had dropped dramatically. PWC reckons that issuers will reintroduce fees to compensate.
It found that lenders could be losing out on £600 million a year from well informed credit card users, or “rate tarts”, who move from one promotional deal to the next to get the best rate.
“We have been expecting the return of annual credit card fees in certain situations,” said PWC. “Average revenue per card, before fees but after charge-offs, has probably halved over the past five years.”
Partner Richard Thompson added: “There’s an enormous amount of pressure on margins and more pressure from regulators and competitive threats and therefore one can’t expect lenders to sit back and do nothing. There’s no reason why annual fees shouldn’t come in.”
The firm said that revenues from credit cards had dropped from 11 per cent in 2000 to six per cent this year.
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