Lloyds TSB to levy annual fee to 'low-usage' customers

Lloyds TSB has written to around 50,000 credit card customers to inform them that from March 1st 2007 they'll have to pay an annual fee of £35 unless they start using their cards more frequently.

These aren't customers who owe them any money, they're customers who do not use their card very much and include card holders who have inadvertently ended up with a credit balance because they've overpaid.

Lloyds TSB has not given a clear definition of what customer activity they regard as "low usage."

Customers who have recieved notification of the impending charge can avoid paying by contacting the bank to cancel their card.

Industry experts believe the move is an attempt by Lloyds TSB to recover money they lost when the Office of Fair Trading (OFT) ordered providers to lower the penalty charges they impose on people who are miss repayments. They are the first of the Big Five high street banks to impose an annual fee and others may now follow suit.

The decision to levy a charge coincides with news that Lloyds TSB reported a surge in profits in 2006, up by 8% on 2005 to £3.71bn.