Some credit card providers have introduced major changes to the charges on their cards to boost their income after the OFT capped the fees they could charge to defaulting clients a year ago according to moneyfacts.co.uk.
It says that in the last two weeks six providers have made major changes to some or all of their cards ranging from interest rate increases of up to 10 per cent on cash withdrawals to the shortening of interest free deals.
Chiltern Debt Management general manager Jackie Newton says: “For years credit card providers were lining their pockets by charging people who defaulted on their credit cards excessive amounts to write to them.
“The OFT stopped this a year ago and that has had an impact on the providers bottom line so they are now looking to generate revenue in other ways.
“Anyone who has a credit card should check the terms and conditions carefully, particularly before using them for cash withdrawals which can work out very expensive.”
Among the culprits are GE Money which has increased its cash rate to 25.517 per cent and raised its withdrawal fee by 0.5 per cent and Lloyds TSB’s cash withdrawal rate has increased to 27.948 per cent.
Moneyfacts.co.uk personal finance analyst Michelle Slade says: “Perhaps this shows lenders have cottoned on to the fact that in the current financial climate, many more people rely on their credit card to withdraw cash in order to make ends meet.
“It may also be that the card providers see the withdrawal of cash as an early warning sign that a customer may be encountering financial difficulties.”