CREDIT CARDS

Are Credit and Debit Card Surcharges Too High?

Which? has today made a super-complaint to the Office of Fair Trading (OFT) asking for it to look into ‘excessive’ credit and debit card surcharges. But are they really too high?

No one likes to pay more for something than they really should and one of the most annoying things for anyone – especially when paying on a budget – can be what often feel like additional taxes when paying with a credit or debit card.

The truth, according to consumer group Which? is that the cost to companies for taking payment by debit card is around 20 pence and no more than 2 per cent for a credit card.

Yet, most companies charge more than this, adding a fee for any sort of card transaction. You’d think that forking out £5,000 on a flat deposit would be enough, but Which? research found that one of London’s largest estate agents, Foxtons, has a £25 debit card charge when you pay a £5,000 deposit. A family of four booking a return flight with Ryanair would be charged £40 to pay by debit or credit card.

But it’s not just the private sector who are cashing in, the government appear to be getting in on the act, too: Bath and North East Somerset council charges a 3 per cent credit card charge, while the DVLA adds £2.50 for paying by credit card.

"Consumers are really fed up with paying excessive card charges,” Says Which? chief executive, Peter Vicary-Smith.

“So far, over 40,000 people have pledged their support for our campaign to bring these to an end”.

The nation needs an extra £39 billion to enjoy the same standard of living they experienced a year ago. The latest Consumer Price Index was shown to have risen from January to 4.4%, a 0.3% rise and typical average household expenditure is estimated at £35,363 per year following this rise. MGM Advantage estimated UK households need an extra £629.03 per person a year to maintain previous lifestyles.

"Household budgets are being hit from every direction, with increased unemployment, wage growth stagnation and benefit cuts squeezing income; whilst inflation and a potential rise in interest rates hit expenditure,” said Joanna Elson OBE, Chief Executive of the Money Advice Trust.

Prepaid Cards For Family Budgeting

A good way to help you manage your spending this year could be by ditching the credit card and using a prepaid credit card instead. The card does not allow you to spend more than the amount you loaded onto it so it prevents you from overspending and getting into debt.

You can purchase one for a small price from the high street and then load your budgeted allowance for a certain area you do not want to overspend on, onto the card.

Some providers will then credit your card with the amount you spent purchasing the card, so you can then use it to pay for items as you would a normal credit or debit card.

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