Credit cards up transfer fees

Credit card balance transfers fees have increased on average by 0.5 per cent to 2.67 per cent in a year.

New research from MoneyExpert reveals as credit card companies have been forced to cut back on late payment fees and charges for going over credit limits, they have sought revenue from other sources.

Across the market, transfer fees range from 1.75 per cent to three per cent.

A transfer of a £5,000 balance with a three per cent fee, which 90 cards charge, would cost £150.

Some 34 credit cards on the market charge balance transfer fees at two per cent and Capital One's Platinum Mastercard beats the pack at 1.7 per cent.

"What goes down must go up seems to be the experience in the credit card industry," said Sean Gardner, chief executive of MoneyExpert.

"Analysts talk about the so-called water bed effect - cuts in one area mean increases in another area. And that has been the experience for credit card customers with new charges appearing to replace the old charges which have been cut."

He added that a credit card holder opting to switch balances to a cheaper rate should put the cost of any balance transfers into the equation of any savings.

The Office of Fair Trading ordered credit card companies to limit charges at £12 in August last year.

Latest figures from the British Bankers' Association show credit card spending in July hit £7,663 million. However, Brits seem to be learning the lesson about high credit card interest rates as borrowing in total fell by £82 billion.