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Finance giants move to kill free banking by stealth - with annual credit card fees
Finance giants are moving to kill free banking by stealth with the introduction of annual fees on credit cards.
Morgan Stanley has revealed an annual fee of £20 is to be imposed on thousands of customers who hold its Black card.
The change, which comes into effect on June 1, follows a rush by other card giants to introduce new fees and other backdoor charges.
The Daily Mail revealed in February how Lloyds-TSB was introducing an annual fee of £35 for around 50,000 prudent customers.
The group was dominated by people who pay off their bill each month and therefore don't generate any income, in terms of interest and penalty charges.
Earlier this year fees of £2 a month - £24 a year - were introduced for the Co-operative Platinum Visa and Northern Rock's Base Rate Visa cards.
And just last week, it emerged that the giant Royal Bank of Scotland- NatWest group is to introduce a range of new charges.
These include a fine of £12 for card customers who forget to alert the bank to a change of address and higher interest rates on cash withdrawals.
Banks are redrawing the rules for credit cards after they were forced to slash illegal and unfair penalty charges for those who miss payments.
Last year, the Office of Fair Trading(OFT) told the industry to cut charges of around £25 to a maximum of £12 or face legal action.
Now, the finance giants are retaliating through the introduction of fees and other methods such as reducing the length of the interest free period for card purchases.
Personal finance expert at the price comparison website, uSwitch.com, Mike Naylor, predicted other banks will impose annual fees on credit cards.
He said: "We are seeing an increasing number of leading credit card providers bringing in monthly or annual fees, which is of little surprise given that many are trying to find new ways to recover the £300 million of profits lost as a result of the OFT?s clampdown on default charges just over a year ago.
"We would not be surprised to see more credit card providers move to introduce fees, in particular monthly or annual fees, before the end of this year.
"As such, consumers should continue to keep a close eye on the small print and the correspondence they receive from their provider, and seriously think about switching away from those that do introduce fees for no added benefit."
Morgan Stanley's move on annual fees is only one way the company is increasing charges. It has also increased the charges it imposes on its 1.5m customers for using the credit cards overseas.
The figure has risen from 2.75 per cent of the value of any transaction to 3 per cent. Again, there is every chance that others will follow suit. The bank said the changes were simply a reflection of changes in the costs of operating.
Finance giants are moving to kill free banking by stealth with the introduction of annual fees on credit cards.
Morgan Stanley has revealed an annual fee of £20 is to be imposed on thousands of customers who hold its Black card.
The change, which comes into effect on June 1, follows a rush by other card giants to introduce new fees and other backdoor charges.
The Daily Mail revealed in February how Lloyds-TSB was introducing an annual fee of £35 for around 50,000 prudent customers.
The group was dominated by people who pay off their bill each month and therefore don't generate any income, in terms of interest and penalty charges.
Earlier this year fees of £2 a month - £24 a year - were introduced for the Co-operative Platinum Visa and Northern Rock's Base Rate Visa cards.
And just last week, it emerged that the giant Royal Bank of Scotland- NatWest group is to introduce a range of new charges.
These include a fine of £12 for card customers who forget to alert the bank to a change of address and higher interest rates on cash withdrawals.
Banks are redrawing the rules for credit cards after they were forced to slash illegal and unfair penalty charges for those who miss payments.
Last year, the Office of Fair Trading(OFT) told the industry to cut charges of around £25 to a maximum of £12 or face legal action.
Now, the finance giants are retaliating through the introduction of fees and other methods such as reducing the length of the interest free period for card purchases.
Personal finance expert at the price comparison website, uSwitch.com, Mike Naylor, predicted other banks will impose annual fees on credit cards.
He said: "We are seeing an increasing number of leading credit card providers bringing in monthly or annual fees, which is of little surprise given that many are trying to find new ways to recover the £300 million of profits lost as a result of the OFT?s clampdown on default charges just over a year ago.
"We would not be surprised to see more credit card providers move to introduce fees, in particular monthly or annual fees, before the end of this year.
"As such, consumers should continue to keep a close eye on the small print and the correspondence they receive from their provider, and seriously think about switching away from those that do introduce fees for no added benefit."
Morgan Stanley's move on annual fees is only one way the company is increasing charges. It has also increased the charges it imposes on its 1.5m customers for using the credit cards overseas.
The figure has risen from 2.75 per cent of the value of any transaction to 3 per cent. Again, there is every chance that others will follow suit. The bank said the changes were simply a reflection of changes in the costs of operating.
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