Many credit card companies today are offering zero per cent deals which certainly help customers save money. But what customers don’t know is that with certain credit card companies, even a day’s delay in payment can rack up sums more than some people can chew.
Take for instance the case of Fiona Hannon from Egham, Surrey. Hannon, who has a Virgin Money credit card, missed a payment of just £6.27 by a matter of days and was slapped with a penalty of £100. She transferred £3,700 on the card for a six-month zero per cent period in October and was due to make a minimum payment on 9 December, but due to unforeseen reasons couldn’t make the payment on the due date and waited until 14 December before repaying £160.
For the few days delay in payment, the company charged a late payment fee of £25, which exceeded her credit limit, for which she was further slapped with a £25 over-the-limit fee. This was not enough; the company charged her interest on the whole of the balance as she had had invalidated the zero per cent interest-free deal by missing the payment which worked out to £47.
Hannon said now she knows how zero per cent trick works and how credit card companies make their money. But luckily Virgin Money refunded the £50 charges after Hannon complained.
Nick White, head of personal finance at uSwitch.com it is important that consumers to their homework well before selecting a particular product. Always check for fine prints or hidden charges as it will give you a clear indication between the best and the worst credit cards. Many consumers are taken aback only after they have been penalised.
Normally, the late payment fee is £20. But there are some credit cards such as Halifax's One Visa card, HSBC's Online Mastercard and Sainsbury's Visa that charge its customers hefty £25 fee. Other credit card companies like Nationwide, Tesco and First Bank charge fees of only £15. They are supposed to be the cheapest in the market.
Meanwhile, the Office of Fair Trading, which has launched its investigation in November 2003, to find out 'excessive' penalty charges, such as late-payment and over-the-limit fees, is close to issuing its findings.
Posted
on : Thu, 17 Mar 2005 00:00 GMT | Credit Cards News
By : Mike Lawson
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