Credit card late fees - too high

30 November -0001

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Credit card users are charged too much for late payments, according to the Office of Fair Trading.

After an intervention, by the Office of Fair trading, Eight major credit card companies; Including MBNA and Barclaycard, have been given three months to cut late charges down to size.

The OFT will now hold consultations on it's findings. The law allows a company to charge customers for breach of contract, but there are limits on the charges that can be imposed.

Consumer groups welcomed the OFT's decision although some warned that forcing banks to cut the charges could lead to cardholders paying higher interest rates as banks sought to replace lost money from other sources.

Barclaycard, one of Britain's biggest card providers, confirmed that it was one of the banks that had received the letter. It hit back at the OFT.

"We do think that the concept of charging customers who break the terms of their contracts is unfair," a spokesman said. "Clearly we believe that what we are doing is fair and from the customer's point of view, no one actually needs to pay these charges if they pay their bills on time and keep within their credit limits."

The Banks have replied to the OFT, stating that the charges are fair, but the OFT is giving them three months to come up with a suitable explaination. If they do no comply, face lagal actoin forcing them to cut the fees.

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