Banks making £38m through charges loophole

An oversight in the Office of Fair Trading’s (OFT) ruling means credit card customers could end up paying above the limit of £12 set on penalty fees by the OFT, according to research by moneysupermaket.com.

Banks, building societies and credit card providers have been charging interest on the £12 default charges when users haven’t paid the next balance in full, according to the website’s study.

Claiming that the money credit card companies charge in interest and taking advantage of the loophole amounts to £38 million a year, the website called on the OFT to close the loophole.

Almost a quarter of UK adults had to pay at least one default charge over the previous year, the study found.

Of them, 44 per cent were subject to one default charge while 13 per cent had at least five charges.

Rob Kenley, head of credit cards at the comparison website, said: "We recently conducted a YouGov poll that showed over 20 million credit card default charges were levied in the past year. Typically, over the course of a year, that £12 charge would have £1.91 in interest added to it, equating to over £38 million going from our pockets into bank profits."