en-us http://backend.userland.com/rss Your Friends @ Myvesta.org.uk (stever@myvesta.org) myvestaukblog_archive.html stever@myvesta.org 114423222400044483 Late repayment of credit card debt is the main cause of penalties
Charges for failing to make the minimum payment on a credit card bill on time are too high, the Office of Fair Trading (OFT) has said.
A default charge, as it is called, of more than £12 will be considered unfair, the OFT said.

The OFT added it wanted firms to recalculate their charges and only under "exceptional" circumstances would a charge in excess of £12 be allowed.

Consumers pay more than £300m a year in "unlawful" charges, the OFT added.

"Credit card default charges have generally been set at a significantly higher level than is legally fair, " the OFT statement said.

The OFT added that if a credit card firm levied a default charge of more than £12 then it would consider challenging the fee in the courts.

An OFT spokeswoman told BBC News that she hoped that firms would put their own house in order.

"This statement is an attempt to move the market quickly, so consumers can benefit," the spokeswoman said.

"Default charges should only reflect the administrative costs of dealing with the default."

The principle that default charges should only reflect company costs is set to have wider implications for many UK banks and building societies.

Ultimately, the OFT said, this principle would apply to default charges on overdrafts, store cards and mortgage products.

A spokeswoman for Barclaycard, the UK's biggest credit card provider, with 11.2 million cardholders, said it was "seeking further clarification from the OFT and will consider the implications fully before responding any further."

The credit card industry has until 31 May to respond to the OFT statement. The OFT began its investigation into credit card charges in 2004.

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BBC
Wednesday April 5th, 2006