Credit-card providers are finding new ways to make more money from their customers following a crackdown on penalty charges, a consumer group warns.

The group, Which?, found that banks and building societies are using a range of ways to boost their revenue, after the Office of Fair Trading (OFT) in the United Kingdom ruled that charges levied when customers fail to make the minimum payment on a bill were unfair.

The ruling, in April last year, forced providers to cut their default charges to £12 or less.

Since then, Which? found that other fees and charges had increased.

bringing back annual fees

Several credit-card companies are bringing back annual fees, while others are charging low usage fees and hiking balance-tansfer costs, it says in its September issue of Which? Money.

Editor Martyn Hocking says: "Credit-card providers seem to be resorting to a raft of ingenious methods to recoup lost revenue following the OFT crackdown on penalty fees."

Northern Rock was one of the first firms to introduce an annual fee. It now charges £2 per month for its base rate tracker credit card.

The Co-op Bank also charges £2 per month for its Platinum Visa credit card.

Lloyds TSB and MBNA have introduced penalty fees for 'inactive' customers.

Lloyds imposed a £35 penalty on a number of its customers who had not used their card for some time, while MBNA has contacted customers with a credit balance who have not used their card for more than a year to warn them of a £10 penalty.

Barclaycard - the most popular credit card - is the latest to threaten fees. It is expected to hit its one million inactive customers with fees of £10 to £20.

tactics

At the same time, the cost of switching a balance from one card to another is rising - from a typical two per cent to 2.5 or three per cent.

Halifax, for example, has raised its balance transfer fee from two per cent to three per cent.

Many providers have also removed the cap on the maximum fee they can charge.

Other tactics are being employed to increase the amount of interest customers pay.

Some firms are changing the way repayments are allocated, so the cheapest debt is repaid first, and others are cutting their minimum payments, so the debt takes longer to repay - and accrues more interest charges.

Some providers, including Barclaycard, Lloyds TSB, the Royal Bank of Scotland (RBS) group - which includes NatWest and Mint - and Capital One, have increased interest rates or fees for cash withdrawals.

Meanwhile, some firms are still sending out credit-card cheques, which often charge interest at more than 20 per cent. They include Barclaycard, Capital One and MBNA.

RBS has scrapped the cheques, but treats gift-voucher purchases as cash withdrawals, which attract more interest.

The group is also fining people £12 for failing to notify it of a change of address. If a statement is returned twice, customers are hit with the fine.

- Reuters