Card Issuers Slash Charges
Credit card issuers respond to OFT deadline by slashing charges
5th June 2006
A total of 5 credit card issuers have now slashed their late payment charges by up to 50% in response to the Office of Fair Trading's deadline for responses to a report on the fees.
The OFT's report, published in April, said that card companies were making up to £300m a year from illegally high penalty fees for late payments. The OFT said that issuers could only charge an administration fee to cover the expenses caused by late payments, and not include any punitive element.
While the credit card industry insists that the OFT was wrong in its conclusions, many banks have nevertheless agree to cut their charges to the maximum £12 the OFT said was legal.
This means that MBNA will be reducing its fee by over 50% from £25, with other banks including Barclaycard, Lloyds TSB, HBOS and HSBC also reducing their charges to £12.
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