Credit-Card Charges To Rise 50%!

Banking and Borrowing

03 March 2006 | 0 Comments

Millions of cardholders face higher bills as the UK's second-largest card issuer massively hikes its charges.

If you have an MBNA-issued credit card (and several million of us do), brace yourself for higher bills, because the lender has announced a 50% increase to its transaction-handling fees!MBNA's fee for processing balance transfers, credit-card cheques and cash withdrawals will rise from 2% to 3%, with the maximum fee for balance transfers being hiked to £75 from £50. These new charges take effect on 1 April (April Fool's Day) -- how appropriate!Bank of America acquired US-based MBNA Corporation for almost $35 billion (£20 billion) on 1 January this year, and it's clear that the new owner is trying to squeeze more cash out of its UK cardholders. Indeed, back in November, MBNA stunned its customers by introducing annual fees of up to £25, aimed at cardholders who pay off their bills in full each month.MBNA is a serious heavyweight in the market for UK plastic, second only to Barclaycard. The group issues cards on behalf of over eight hundred different affinity partners, including charities, sports clubs (see this recent article) and other well-known brands, such as Abbey, Alliance & Leicester, RAC, SonyCard, Thomas Cook and Virgin Money. (I list yet more partners in Do You Know Who You're Dealing With?).In other news, with effect from 1 March, First Direct's Gold and Standard cardholders face a 1% hike in interest rates for purchases and cash withdrawals, while Classic cardholders enjoy a ½% increase. Here are First Direct's new rates:Card name Purchaserate (% APR)Cash-withdrawalrate (% APR)Gold15.919.4Standard16.920.4Classic19.923.5Although the Bank of England's base rate hasn't changed since it was cut to 4½% a year last August, this isn't the first round of credit-card rate hikes this year, as I warned here. Indeed, credit-card interest rates have been creeping up for some time, plus card issuers are raising existing fees or introducing new charges.Nevertheless, it's still possible to beat plastic providers at their own game if you play your cards right! Read these articles to learn how:More Bad News For Rate TartsHow Credit Cards Rip Us Off!Conquering The Card Tarts!Your Ultimate Guide To Credit Cards!More: Why pay interest at all? Get a 0% credit card today! | Best Buy personal loans.

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