In the UK the 8 largest credit card providers have been ordered to reduce their charges, for default and late payment, by between 40 and 50%. The current late payment charge by most major issuers is between 20 – 25 ($30 – $40 US) and the have been instructed to slash that down to 12 -15 UK ($18 – $20 US).
The UK Office of Fair trading, who have been investigating credit card charges for the last few months, stated “The OFT considers that, in a consumer contract, a default charge is likely to be disproportionately high if it is more than a genuine pre-estimate of the damages that the card issuer would win in court if it sued the cardholder for breach of contract,” adding “The OFT’s provisional view is that the levels of the default charges imposed by the credit card companies need to be reduced in order to be fair.”
In the opinion of the OFT the current charges of between 20 and 25 excessive and possibly illegal and has given the card issuers 3 months to respond.
Whilst the current ruling is provisional it is expected that the final ruling will apply to all credit card issuers in the UK and, if necessary, the...
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