It has been revealed that credit card companies have introduced an astonishing 31 different fee rises recently, a move that could end up costing consumers millions of pounds collectively.
The changes were revealed by Moneyfacts which showed that there had been large rises in fees charged for withdrawing money from cash machines as well as rises in cash interest rates. It has also been revealed that Banks and Building Societies have also increased the commission charged for foreign use as well as increasing balance transfer fees.
Alliance & Leicester implemented the largest cash fee rise, upping its rate from 2.25% to 3%. This means that withdrawing £250 with your credit card will now cost £7.50. Other banks have also upped their charges with the AA, Bank of Scotland, Halifax and Intelligent Finance all putting up their rates from 2.5% to 3%. Nationwide, Smile, and Yorkshire Building Society also increased fees from 2% to 2.5%.
Smile has increased its cash rate by the greatest amount, pushing up the interest rate for cash withdrawals on its Gold Visa from 14.9% to 23.9%. The problem with withdrawing cash using your credit card is that it is very expensive, first of all you incur a fee and then there is no interest free period. So it is best to avoid taking money out using your credit card at all costs. Comparisons with overdrafts and personal loans, show that borrowing money in this way has always been extremely expensive.
Balance transfer fees have also gone up with Alliance and Leicester increasing its balance transfer fee from 2.25% to 3%.
These new fee and rate rises plus the credit crunch are behind a massive customer move away from credit cards towards debt consolidation loans. Many borrowers are finding it necessary to tighten their financial belts, and this includes clearing old card balances and cutting up cards.