£35 bill for ‘none profitable’ Lloyds credit card customers

High street bank, Lloyds TSB is forcing many of its most savvy credit card customers to pay an annual fee of £35.

The fee will apply to around 50,000 account-holders who do not use their cards much, and pay off their balance in full each month.

Credit card companies and banks think of customers who do not utilise their cards a great deal as a drain on the business. They do not generate any income for the banks with purchases, interest on balances, and charges – yet the banks upkeep their accounts.

After being forced to scrap illegal and unfair penalty charges for those who miss payments, the banks are looking for other means to diversify their income from customers. And this along with a few others proposed methods appear as a ‘get your own back’ broadside from the high street Banks.

The Office of Fair Trading told the industry last year to cut charges of around £25 to a maximum of £12 or face legal action.

The finance firms are retaliating by introducing fees and other methods, such as reducing the length of the interest-free period for card purchases.

The new chief executive of the Nationwide said a system of annual fees on bank accounts was the best way forward. Graham Beale, who takes over on April 1, believes a monthly fee on current accounts is the ‘fairest’ way to charge.

Lloyds TSB is the first of the ‘big five’ high street banks to impose an annual fee on customers. But others are likely to follow suit. Sandra Quinn, communications chief at APACS, the trade body for institutions delivering payment services, said other banks would not be far behind.

‘This – the introduction of annual fees – is a natural outcome to the work the OFT did last year on default charges,’ she said.

‘If you have lost one area of income, all credit card issuers will be looking at other ways to get income. They are not charitable organisations. The message is either use your card or cut it up.’

The letter sent by Lloyds TSB to customers this week dresses up the introduction of the £35 fee as positive.

It states: ‘So that we can offer you an attractive product now and in the future, we will be charging you an annual fee of £35.’ No doubt my letter will be in post in the near future!