Are Annual Credit Card Fees The Way of The Future?

Lloyds TSB is the latest bank to impose a fee on some of its credit card customers. 50,000 account holders have been told in writing that they will have to pay a £35 annual charge. The fee applies to low-usage customers and will take effect from 30 days after the date of the letter. Customers who never use their card will be amongst those affected but the bank has not given a formal definition of low usage.

If the account holder does not intend to use their card they can cancel the account by informing the bank. The account will then be closed and the fee avoided. The card should also be destroyed. Alternatively, for those who start to make more regular use of their card, the bank has offered 0% interest on new purchases until May.

Last year credit card companies had to reduce penalty charges from around £30 to £12. These charges are levied on customers who miss repayments, and the reduction followed an investigation by the Office of Fair Trading. According to experts, credit card companies are now trying to make up for the loss of income and other providers could follow Lloyds TSB.

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