Credit card providers set to hike interest rates
Credit card providers look set to hike their interest rates and introduce annual fees as they battle to survive, a report has claimed.
The economic downturn has already cut credit card borrowing by 3% with the number of plastic cards down 8% over the last year, said PricewaterhouseCoopers. At the same time, bad debts in the sector have reached historic highs and now stand at nearly 6% of outstanding balances with every chance that these will reach 9% by the end of 2010, it added.
Many consumers are mad at card issuers for imposing fees, boosting interest rates or raising minimum payments and penalties. And like Casser, some are upset enough that they threaten to cancel their cards in retaliation.
At the high end of the market, it expects customers to be charged to have access to premium benefits, while at the lower end, marginal customers will be expected to pay fees for even standard credit cards.
Banks remain under colossal pressure to boost balance sheets and their credit card operations, fast-becoming another drain on dwindling profits, are likely to be sold alongside insurance and other retail services and products, giving new entrants the chance to enter the credit card market.
The group said total household borrowing had remained broadly constant during the past 12 months at around £1.5 trillion, around £1.2 trillion of which is secured lending, while around £230 billion is unsecured and owed through credit cards, loans and overdrafts.
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