Credit card holders need to stand up and take notice yet again, as there are high chances of annual charges returning following American bank MBNA’s introduction of charges up to £25.
Consumer counselling groups are persuading credit-card holders in the country to opt for a swap instead of paying extra fees as yearly charges to banks, as banks could take a cue from the £25 charges imposed by MBNA to around 40,000 British customers.
Interestingly, cardholders affected with charges have been offered favourable choices of an interest rate of 10.9%, or a 0% deal on balance transfers as well as purchases. However, unaffected cardholders have been offered none of these benefits.
Mike Naylor at the consumer watchdog, Which? advised cardholders saying, “Annual fees increase the cost of using a credit card, so if you are asked to pay them you should almost certainly switch. The market is still very competitive — there’s no need to pay a fee.”
Nevertheless, MBNA disagreed and claimed that very few customers would be hit by the charge, albeit not dismissing a sweeping fee from next year. Paul Lawler, spokesman at MBNA was quoted saying, “This change will affect less than 1% of our customer base in the UK. Those affected have already been notified that the fee will come into force from December.”
Yet, experts are cautioning customers that MBNA’s move is likely to trigger opponent firms to follow suit, i.e. restore fees and raise concerns of an unsolicited return of annual credit-card charges.
As Stuart Glendinning of comparison website, Moneysupermarket, commented, “Annual fees had almost been killed off, but I suspect that other card companies are hoping that MBNA doesn’t lose too many customers over this, so they can follow suit. You only have to look at the speed with which the card companies pounced on balance-transfer fees to see there’s a strong possibility that annual fees will make a comeback.”
Meanwhile, even as leading credit lender, Barclaycard asserted that it was not reinstating fees currently, it was careful not to rule out such a possibility in the near future completely. Barclaycard’s Ian Barber said rather cautiously, “It’s no surprise to us that other providers are looking at reintroducing annual fees. It is becoming increasingly difficult to run accounts profitably.”
Moreover, companies that levy charges try to offset them by providing certain rewards, such as the Gold Base Rate card of the co-operative bank that charges £120 per year, but grants its customers services like financial- advice along with discounted holiday packages in association with the Co- operative Visa Travel Club.
Similarly, cards issued by MBNA, like BMI and Virgin Atlantic, attach travel-related benefits with their annual charges of £80 per year.
Posted
on : Tue, 25 Oct 2005 18:30 GMT | Credit Cards News
By : Anne Philips
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