08 May 2007
Credit card issuers are finding new ways of squeezing the last penny out of customers, in a bid to recoup the loss of income caused by the Office of Fair Trading’s capping last year of late payment fees and penalty charges.
The latest wheeze is to charge customers purchasing gift vouchers as though the transaction was a cash withdrawal, thereby charging much higher rates of interest.
For instance, Royal Bank of Scotland customers buying gift vouchers with their credit cards will be charged at the cash withdrawal rate of 24.9 per cent, rather than the lower purchase rate of 16.9 per cent.
However, RBS will not levy a handling fee of 2.5 per cent which normally applies to cash advances and will maintain the interest free period of up to 56 days on gift voucher purchases.
Most credit card issuers charge a higher rate of interest for cash withdrawals, foreign currency, travellers’ cheques, electronic money and spending on gambling.
Teresa Fritz, principal researcher at Which? magazine said: “A lot of people will get caught out as many people use their credit cards to buy gift vouchers.”
RBS has also announced that it will charge its credit card customers a £12 fee if they fail to inform the bank of a change of address.
Since the OFT’s capping of penalty charges last year, dozens of credit card issuers have raised their interest rates or imposed new fees.
The average APR has increased from 15.19 per cent to 16.60 per cent for purchases, and from 20.37 per cent to 23.01 per cent for cash withdrawals.
To see some of the best credit card deals, visit: http://www.find.co.uk/creditcards/standard_credit_cards/a_z_cards_comparison_table