Credit Card Charges 'Excessive'
The OFT has told eight card companies that default charges are too high
26th July 2005
The Office of Fair Trading (OFT) has written to eight major UK credit card issuers to tell them that it considers the charges they make for defaults to be excessive.
The charges, made when a customer is late with or misses a payment, are generally around £20-£25 which the OFT says is disproportionate.
Under consumer contract law, any charges made for breach of contract must reflect the loss incurred by the charger, and to compensate for that loss. The OFT has said that a charge made on this basis would be lower than that currently charged.
The credit card companies now have three months to respond to the OFT ruling, and if no suitable action is taken to rectify the situation then the OFT has the power to take action in the courts.
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