Credit card charge ruling kicks in
(02 June 2006)
The repercussions of the recent ruling by the Office of Fair Trading (OFT) to impose a cap on credit card charges are now being felt throughout the market – with three major providers having shown their hands this week.
Barclays, HSBC and Lloyds TSB have all slashed the penalty fees charged on the card services to below £12 after the OFT stated earlier this year that existing charges were prohibitively excessive.
This is a significant move, given that their previous fees had exceeded £20 – but it may not all be good news for the credit card customer despite this evidence that the wind of change is starting to grow noticeable through the industry.
It seems likely that providers will look for ways to make up what will be a considerable shortfall in their income – given that they typically gained some £300 million a year under the previous charging structures.
Nick White of uSwitch outlined the likely manner by which things might proceed from hereon.
He said: "This development comes as no surprise and will no doubt be reflected across the credit card industry in due course.
"[Credit card providers] are unlikely to write off £300 million a year generated by the old levels of default charges. We predict that consumers could see the APR on their credit cards being raised by at least two per cent and the reintroduction of annual fees."
The OFT has warned that legal action may be forthcoming against providers which to not comply with its measures swiftly – but it may soon find itself battling against the knock-on effects detailed by Mr White.
In these times of uncertainly for the longer-term credit market, it may be wise to bide your time a little before diving in and committing to a deal which may prove expensive and unwelcome as the months go by.
As such, a payday loan could provide a short-term answer to any financial needs you have. As well as providing you with a cash advance of between £80 and £1,000 it can perform the important role of buying you time while you consider your next move where longer-term credit is concerned.
It's worth remembering that, when receiving short term cash from a reputable company like My Payday Loan ( http://www.mypaydayloan.co.uk ), you will never pay back any more than is explicitly stated and there are no caveats or confusion. Fees do not exceed £25 for every £100 borrowed, and there is no risk of seeing weighty longer-term commitments accrue.
Whether you simply need quick extra funds to bankroll a special occasion or pay off an unexpectedly high bill, or you require a cash injection to help you readjust to new financial circumstances, a payday loan can help you out and soften a potentially tricky situation.
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