Credit card costs 'to soar'

Credit card providers in the UK have devised a range of new charges for card holders, according to a recently-released Defaqto report.

The charges are an attempt by the industry to recoup losses that they sustained when they were forced by the Office of Fair Trade to cap default payments last year.

As well as inventing new charges, the industry has also increased some of the existing ones, Defaqto found.

For example, foreign transaction fees have increased and low usage fees have been introduced, along with fees for failure to notify of change of address.

David Black, principal consultant banking and author of the report said: "Credit card providers have lost a great deal of highly profitable revenue because of the charges cap and will inevitably seek ways to replace their lost income.

"This is even more imperative for the largest institutions because of the pressure on them arising from the knock-on effects of the sub-prime lending crisis."

The banking giant Citigroup is the latest financial giant to struggle with the long-ranging effects of the credit crisis.