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By Reno Charlton
News Editor
Almost a year ago credit card providers were forced by the Office of Fair Trading to reduce their late or missed repayment fee penalties from £20 or more to a maximum of £12.
While this was first thought to be good news for credit card users, it’s become increasingly noticeable that cardholders could now be footing the bill for this reduction.
Credit card rates and fees generally creep up over time; however, over the past year in particular, credit card providers have been hiking up the more hidden terms and conditions charges, as well as the more noticeable standard interest rates.
Everything from increased interest rates and higher cash withdrawals charges to increased foreign transaction fees and higher handling fees for balance transfers have been implemented by credit card providers to try and recoup lost profits from reclaimed and reduced default charges.
The increased cost of using a credit card further highlights the importance of making sure that you have the best credit card for your usage.
Lisa Taylor of Moneyfacts stated: "It's important to review your credit card regularly to ensure you're getting the best deal. When your provider sends through revised terms and conditions take time to read the changes, as there is every chance your credit is costing you more."
In the current financial climate, with everything from our mortgage repayments to our food and petrol costing us more, it is more important than ever to make sure that we are not lining the pockets of the credit card fat cats by using a card that is costing us more than we should be paying.
Lyndsey Burton, Director of Credit Card Comparison Online said: "Aside from the increases in fees of using just one credit card for general usage, it’s important to know when a credit card is saving you money and when it’s not."
"Credit cards are rarely good for more than one type of user, and a card taken out for it’s great balance transfer deal 12-months ago may suddenly start to re-open the hole in your pocket it fixed if you keep hold of it for general spending."
"Credit cards are rarely good at much more than one type of usage – and the trick is to make sure you’ve got the right one for your spending habits."
It’s important to carefully choose the right credit card that’s offering you the most competitive terms and rates for your usage. With the choice of cards available, you should be able to find a better deal on a suitable card if you’re currently paying over the odds.
Credit card users who tend to roll a balance over each month are often the people paying out too much in interest and who could potentially save the most. Switching to a low interest rate credit card could save hundreds of pounds a year in interest.
Similarly, if you do clear your balance in full each month but get hit by the more hidden charges, there are credit cards that waive these fees, such as offering commission free use abroad, or ones that offer more time to repay the balance in full before being charged any interest.
Also, if you are good at keeping your balance at zero – a cash back or rewards credit card could actually be giving you money just for switching the plastic you pay on.
Even while credit cards become more expensive, the competition between issuers is as hot as ever – and by deciding which type of credit card user you are, you can pick the best credit card for your needs and avoid having to cough up any cash for the privilege of plastic spending.
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