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Providers begin to reduce charges

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Credit card charges have been reduced by 45 providers a month after the Office of Fair Trading (OFT) ruling that penalties should be £12 or less, has revealed.

The OFT gave providers until 1 September to reduce their charge levels but has found that 45 of the 60 card providers listed on the financial information site have agreed to reduce their charges, with more than two thirds already putting a new lower charge in place.

Although 15 providers have not reduced their charges as yet, two – Co-operative Bank and American Express – have reduced their fees below the £12 threshold, to £11 and £8 respectively. The ruling on charges has, however, also resulted in policy adjustments, such as increased interest rates from Barclaycard, a £5 unpaid direct debit and cheque fee from First Direct and an uncapped 3% balance transfer fee from Halifax/Bank of Scotland.

Andy Britchford, personal finance analyst at, said: “While the reduction in fees can only been seen as a positive step, it is merely treating the symptoms and not the cause. Lenders should be more proactive, providing early support, advice and information.

“A longer term, more responsible approach to lending, with particular focus at the initial application stage could perhaps reduce some of the massive bad debts many face. Surely it is better to prevent these charges and unmanageable levels of indebtedness rather than just reduce the consequential fees.”

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