The Office of Fair Trading (OFT) has written eight major credit card firms regarding their level of default charges that the OFT feels is excessive.
Frequently if a credit card user fails to pay their bill on time, goes over their withdrawal limit, or pays by a direct debit or cheque that is refused, the user will be charged anywhere from £20 to £25.
Card companies say they calculate default charges fairly, based on potential damages a user can incur if they are in breach of contract. Regardless, the OFT believes the charges should be lowered to be fair.
So far the card companies have been cooperating with the OFT's inquiry. They believe the default charges are fair, but have given the OFT three months to prove their accusations.
The OFT has said they will take the matter to the courts if it becomes necessary.
To learn more about credit cards, click here
© Adfero Ltd