Excessive card charges to be banned - Credit cards - News - Moneyfacts


Moneyfacts.co.uk News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Excessive card charges to be banned

Excessive card charges to be banned

Category: Credit cards

Updated: 23/12/2011
First Published: 23/12/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The practice of loading expensive charges onto card purchases such as air travel or online bookings is to be outlawed by the end of next year.

The Government said that it is committed to tackling card charges that are 'opaque, misleading and prevent customers from getting a good deal'.

A report was published by the Office of Fair Trading in the summer which called for charges made by airlines and other travel operators to be probed.

Airline customers are often charged hefty booking fees after completing a number of pages on the internet – known as 'drip pricing'.

Figures from the OFT showed that people in the UK spent around £300 million last year on surcharges made by airline operators.

But the Government has said it will go further, banning the practice from most retail sectors.

As well as air travel companies, businesses such as cinemas, rail operators and local authorities have been found using drip pricing.

Under the new rules, businesses will only be allowed to add a small charge to cover their actual costs.

Consumer group Which? described the ruling as a huge victory for consumers.

"Given that airline passengers alone pay more than £265,000 a day in card surcharges, businesses shouldn't drag their feet over this," said Richard Lloyd, executive director of Which?

"While the law will come into force at the end of 2012, we want companies to be upfront and fair over card charges today."

The rules are set to be introduced across Europe from mid-2014 but Mark Hoban, Financial Secretary to the Treasury, said that the Government is leading the way in Europe by stamping out the practice.

"We want consumers to be able to shop around. They have a right to understand the charges they may incur up front and not be hit through a hidden last minute payment surcharge," he added.

"The Government remains committed to helping consumers get a good deal in these difficult times."

Find the best credit card rates - Compare credit cards

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Credit card mistakes cost borrowers £948m

At this time of year, many people could be turning to balance transfer credit cards in an attempt to overcome their Christmas debt. However, many of these borrowers could get caught out in the year ahead, and they could end up paying for it.

6 of the best balance transfer credit cards

Does the thought of opening your credit card bills fill you with fear? If so, you're not alone! Christmas may be over, but unfortunately, many people will still be paying for it, after turning to credit to cover the cost of their festive spend.

Get a better credit score for the New Year

A new year means a fresh start, and one of the best things you can do is take a cold, hard look at your finances – particularly when it comes to your credit score.