Credit card industry hits back

The credit card industry has rejected claims by Which? that it is rife with underhand practices and hidden charges.

09:25 07 January 2005

The credit card industry has rejected claims by Which? that it is rife with underhand practices and hidden charges.

A spokesperson for the Association of Payment Clearing Services (APACS), Sandra Quinn, said Which?'s comments are out of date.

Speaking yesterday she denied that credit card firms are levying unfair charges against consumers.

"Late payment charges and over limit fees are to compensate the banks for the costs that they incur in those fees in charging customers," Ms Quinn said.

Richard Mason, director of price comparison website moneysupermarket.com, added: "Many of the providers' 'bad practices' are slowly being dealt with by the industry."

But he conceded some of Which?'s underlying points.

"As the market for personal loans and credit cards has become increasingly competitive and robust in recent years with many lenders battling for market share, more low-rate deals for the consumer have been on offer than ever before.

"The downside of this has been that providers have tried to claw-back profits through other avenues instead - such as expensive payment protection insurance and hidden charges."

According to Which? the credit card industry makes around 427 million a year from charging consumers who pay late or go over their credit limit. The consumer watchdog also estimated that the personal loan industry makes 1 billion a year from selling payment protection insurance.

Ms Quinn countered charges made by Which? that the credit card industry was profiteering from theses charges, by saying card providers were not "making any profit out of" the charges.

An Office of Fair Trading inquiry is currently underway into the level of these charges; it has yet to report.