Banking, loans and cards

Credit-card providers accused of levying sneaky fees

Credit-card users risk falling foul of “sneaky” fees levied for balance transfers – even for those transfers labelled as “0% offers”.

There has been a renewed battle in recent months between some of the larger card providers – including the likes of Virgin Money and Santander – to get to the top of the best-buy charts with their balance-transfer offerings.

Canny customers who pick the right cards can transfer balances for about three years without paying a penny interest.

However, these cards do charge a one-off fee for making the transfer in the first place, and one consumer organisation says that the vast majority of card users fail to understand the true cost of these deals.

Which? says consumers pay about £334m a year in these balance-transfer fees, but fewer than 5% of those it asked were able to correctly state how much a transfer would cost them. About 70% of those asked said they thought transfers were completely free.

The group also found that only a third of consumers were able to pick out the most competitive card for balance transfers when offered a choice of five rival products.

Which? is asking the Financial Conduct Authority, the regulator, to look at what it considers to be a misleading state of affairs.

“Too many credit-card deals appear to include sneaky fees designed to catch customers out,” says the group’s Richard Lloyd.

“With millions now using credit cards to pay for essentials, it’s vital that the FCA takes action to ensure consumers are well protected. We want the regulator to scrutinise balance-transfer deals and make it easier for people to understand their true cost.”