Comeback for credit card fees

With the announcement that Morgan Stanley and the Co-operative Bank are going to charge fees for some of their credit cards, it means one in eight providers have at least one fee paying product, claims the MoneyExpert website.

Figures from the website show that eight companies now charge fees ranging from £24 to £275 a year.

And, according to MoneyExpert, with profits in the credit card industry falling 43 per cent, more companies and more products are likely to follow.

The study found that fee payers were not even getting better deals, with the average APR on balance transfers for cards with fees standing at 16.78 per cent compared to 16.16 per cent across all cards.

Sean Gardner, chief executive of MoneyExpert.com, said: "The rising tide of bad debt hitting banks and other credit card firms is forcing providers to tighten their belts and think of new ways to make money."

With interest rates rising, the credit market is likely to keep contracting, forcing providers to find other ways of making profits. According to Datamonitor, in 2006, lending shrunk by 4.5 per cent.