Friday 28th of August 2009
Cash-concerned credit card holders may think they are making good headway into paying back their debt by not using their plastic, but they could face a charge for such efforts.
American Express has announced a £20-a-year charge for dormant customers who do not use their Platinum cashback credit cards for a year.
Britons who are currently trying to pay back thousands of pounds on credit cards through an individual voluntary arrangement (IVA) may want to check that the other plastic they no longer use does not levy such a charge.
The Guardian noted that individuals with a Santander Zero credit card have to fork out £10 if they do not use it for six months, while Lloyds TSB charges an annual fee of £35 whatever the type of credit card.
While undertaking an IVA, many households will refrain from using credit cards so they may want to check they are not being charged for doing so.
Speaking to the newspaper, David Black, of financial researcher Defaqto, said: "A mix of bad debt write-offs from customers, fraud and costs of running empty accounts means margins are being squeezed for many card providers. Introducing dormancy fees is a way to cover this."
By Kimberley Parsons
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- IVAs could help you clear your 'damaging credit card debt'
