Credit card chaos benefits consumers

Beleaguered MasterCard, along with Visa and various banks, are facing legal action in the US from retailers who claim they acted together to charge excessive fees.

The case echoes a ruling in the UK by the Office of Fair Trading (OFT), which found MasterCard guilty of breaching competition rules with the interchange fees it agreed with major banks.

Consumers stand to benefit from decisions which reduce the fees that credit card companies charge banks, as higher costs eventually translate into higher prices for spenders.

John Vickers, chairman of the OFT, commented on the organisation’s findings: “The parties of this agreement set the interchange fees to derive revenues from retailers and their customers over and above the costs of providing payment services.

“This unduly high interchange fee was like a tax on UK consumers.”

So called ‘rate-tarts’, people who swap from one low interest credit card to another once the low or no interest rate offer ends, are also costing companies like MasterCard profit problems.

British Bankers Association (BBA) research reveals that for the month of August there was a fall in credit card spending, and higher repayments; further bad news for credit card companies, but signs of good credit management by spenders.

© Adfero Ltd

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