02/02/2006 18:13:00
Analysts increasingly warn that the consumer-friendly days of credit card borrowing are over.
A glut in rate rises and annual fees in recent months has led many industry insiders to speculate that lenders are trying to squeeze out 'rate tarts', the Telegraph reports.
PricewaterhouseCoopers' Richard Thompson said that the "best days" for rate tarts seemed to be behind them, signifying a significant change in the credit card market.
Recently both Tesco and John Lewis increased the rates on their credit cards, despite no corresponding increase in the underlying cost of borrowing.
Tesco's Platinum MasterCard has increased APR on purchases to 15.75 per cent, up from 14.8 per cent. Interest on cash withdrawals has risen from 17.8 per cent to 19.09 and from 15.9 per cent to 16.89 on balance transfers.
Similarly, rates on the John Lewis Partnership card are going up from 14 per cent to 15.5 per cent on purchases and 16 per cent to 17.5 per cent on cash withdrawals. Balance transfers will also rise to 15.5 per cent, an increase of 1.5 per cent.
Additionally, the industry is seeing the return of annual fees, with many credit card lenders beginning to penalise prompt paying customers.
Brian Brown of Defaqto told the newspaper that there were significantly fewer zero credit deals out there, although savvy customers can still find some if they shop around.
"The banks have decided the time has come to start making money on their plastic customers, rather than paying dearly to attract them only for them to switch elsewhere when interest begins to clock up," Mr Brown explained.
The beginning of the end was predicted some time ago, with reports last summer suggesting that many credit card providers were introducing fees on balance transfers, designed to deter rate tarts.
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