Credit card providers are likely to respond to the Office of Fair Trading’s (OFT) demands on fees by canning zero per cent cards, research firm Defaqto has warned.
The OFT said this week that credit card companies have no “legally fair” basis for the high fees they charge for late payments or unauthorised overdrafts.
Consumers, who are currently charged around £25 for each fee, should pay a maximum £12 said the OFT, although even this would have to be justified by the costs involved.
Providers have until 31 May to respond and the OFT has not ruled out legal action.
The fees have been a massive source of revenue and research firm Defaqto warns that card providers may decide that zero per cent balance transfer cards are no longer economical.
“The vast majority of cards charge £20 or £25 for default payments so this ruling is likely to have a major impact on the revenues of credit card companies,” said David Black, head of banking at Defaqto.
“To compensate for this we can expect some of the benefits offered when taking out credit cards to be further reduced and this may also impact upon the availability of zero per cent introductory offers and will increase standard interest rates further down the line.”
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