Banks ordered to slash fees for late credit card payments and overdrafts

So this |will save me 300M a year. Now what can I spend it on?

tim

Janet Stone wrote

"Credit card companies defended their charges. Capital One, with 4 million customers, said: "We continue to believe that our charges are fair and lawful." Others warned they may be forced to reintroduce annual charges and raise interest rates to compensate for the loss of income. Banks may also start charging customers for running a current account, even if it is in credit, if default charges are axed".

Great stuff! I assume then that those of us who do not "forget" to pay up on time, and do not "accidentally" run into overdraft will be subsidising those who do. :-(

Rubbish! No customer is subsidising any other customer these days. Products are designed to be self financing. As soon as they stop being that then banks pull the plug on them. The only thing that is being subsidised by these extortionate fees are the banks, their ever hungary shareholders and the executive directors with their fat pay checks.

What about shareholders from Poland, Czech Republic, Slovakia and the rest of Eastern Europe?

Marcus

How do you work that out? Someone who has a charge card or credit card and pays off the entire sum each month subsidises nobody.

Being charged 15 quid as I was last month for being about 2 quid short on a payment (an accident as I had asked somebody else to make the payment and the amount had been misread) is subsidising nobody except the bank.

Anyway those people running an overdraft are actually subsidising those people who run a current account in credit and pay no bank charges.

Axel

Wouldn't they be included in the "ever hungary shareholders" category mentioned above?

Chris

If they introduce an annual charge, as mentioned above, I will! I have moved CC companies to avoid that in the past.

No they don't. They need to stop chasing rate tarts with loss making deals on interest free credit transfers and cashback.

For most people these two things make no difference to their ownership of a card, but there is a very small minority who manipulate the rules to their advantage. I would wager that the credit card companies make an overall loss on these items. If that is the case they have no place in the market and most certainly shouldn't be subisidised by default charges or compulsory annual fees

I'm fairly sure that this won't happen. Banks make more then enough to cover their costs using the interest margin that the have.

You're already subsiding the rate tarts, personally I'd rather subsidise the forgetful, one day that will be me.

tim

It may force the banks to make up for the lack of penalty charges by increasing interest rates and charging an annual fee for everyone.

It means they don't have to increase other aspects of their charges for everyone, such as interest rates, etc.

Yep, that's right. But if the banks found out that for some reason they couldn't charge a high rate of interest on an overdraft, they'd have to make the money up in other ways, such as annual fees, transaction fees and lower rates of in credit interest.

Marcus

Looking at the egg.com site they say that from May they will not have a minimum balance transfer fee.

At the moment its 2% with a 50 max but from may there is no max... Might make some money out of peope transferring loads of dosh.