Simple Pound

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The FT reports that within the last two months a whopping total of 125 credit card related charges have increased. You could argue that this is clearly a symptom of the credit crunch as financial institutions scrape for liquidity, i.e. good old plain cash.

The trouble is that competition in the credit cards market is strong with hundreds of providers and cards to choose from. This means that increasing the annual percentage rates (the APR you see quoted) is dangerous and would potentially drive away many (existing) customers as well as decrease the number of new issuances. Hence the plan to increase liquidity would result in exactly the opposite - as less customers translate into lower revenues, profits and thus less of the much desired cash.

Look at these statistics:

• 69 cards have seen an increase in the charges for cash withdrawals
• 18 cards are now more expensive to use abroad
• 10 cards have increased balance transfer fees

Banks belonging to the first category include for instance Halifax, Bank of Scotland and Smile, so beware of the fine print before signing a new application with them. This obviously applies for any new credit card application you make as these increased charges might be hidden in lengthy terms and conditions and will thus not be immediately obvious.

Let us know whether you have encountered any other cards other than the ones issued by the banks named above. It would be fantastic to have a detailed list of cards affected by these rate rises.

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