Credit card penalties reach £50m

Monday, July 16, 2007

Credit card penalties reach £50m

British borrowers have paid credit card companies up to £50 million in penalty fees for missing payments in the last six months alone, new research has revealed.

According to the study undertaken by MoneyExpert.com, around 4.1 million credit card payments have either been missed altogether or paid late over the period, equivalent to nine per cent of the nine per cent of the total bills issued by lenders.

Had the Office of Fair Trading not moved to impose a maximum charge of £12 for late credit card payments, the total would have been substantially higher, though market observers have taken these figures as proof that UK borrowers are still struggling.

"This is the latest evidence of how many people are struggling to cope as interest rates start to rise," said Sean Gardner, chief executive of MoneyExpert.com.

"The effect of missing one credit card payment can last as long as three years.

"That is how long the mistake will stay on your credit file and it will be used by firms to decide whether they’re going to lend you cash and what they’re going to charge."

The study also found that borrowers aged 25 to 34 are the most likely to have missed a credit card payment, with 13 per cent having settled their bill late over the past six months.

Source

http://www.thriftyscot.co.uk/Finance-News/072007/credit-card-penalties-reach-50m.html