Fee increases and new penalties introduced since OFT crackdown

According to consumers' association Which?, card companies have raised fees on balance transfers, cash withdrawls and introduced low usage and annual fees as a way of boosting their lost profit since the Office of Fair Trading imposed a £12 cap on credit card penalty charges.

The OFT took action in 2006 in response to concerns that consumers were being ripped off by penalty charges which were as high as £39 for missed payments and defaults on their credit cards.

Martyn Hocking of Which? said: "Credit card providers seem to be resorting to a raft of ingenious methods to recoup lost revenue following the OFT crackdown. To avoid being stung, always check the small print to make sure you know what charges apply."

Which? lists 10 changes to watch out for. They are:

• 1. annual fees – some cards charge up to £24 a year
  
• 2. low usage fees – customers who don’t regularly use their card may be charged penalties of up to £35. Lloyds TSB is to start levying an annual £35 fine on "low users". Barclaycard is planning to charge up to a million inactive customers between £12 and £24 a year simply for leaving their cards in their wallets.
  
• 3. balance transfer fees - the cost of switching a balance is rising, from a typical 2% to 2.5 or 3%
  
• 4. lower minimum payments – so borrowers who only pay the minimum will pay more interest
  
• 5. order of payments – some providers have changed the way they allocate repayments, so they start paying off the cheapest debt first
  
• 6. interest calculation – the lowest APR does not necessarily mean the lowest interest, as there’s no standard interest calculation method
  
• 7. cheeky charges – some card providers sting customers who don’t tell them they’ve moved house, by up to £12
  
• 8. credit card cheques – the interest rate is often more than 20 per cent, there’s a handling fee and usually no interest-free period
  
• 9. withdrawing cash – some providers have increased interest rates and fees for cash withdrawals
  
• 10. gift vouchers – some cards treat gift voucher purchases as cash withdrawals, which attract a higher interest rate.