"Consumers urged to query credit card hikes"

Consumers in the UK are being urged to query any unexplained increases in their credit card fees or interest rates, after industry officials highlighted how many credit card companies were increasing fees and interest rates on credit cards for no reason and without any explanation.

Many credit card firms are trying to recoup losses seen during the last couple of years by hiking up other fees, and one way in which some are doing this is by increasing the interest rate on the account.

Officials have said that in the event that the interest rate is increased on a consumer’s account without any form of explanation the consumer should contact the credit card firm and query the decision to increase the rate.

If the card provider cannot provide an explanation or reason then the consumer is advised to contest the increase. It is thought that many card providers will then back down and return the interest rate to the original one.

In some cases the card provider may claim that the reason behind the rate hike is that the consumer poses a higher risk than in the past, but regulators have said that the provider needs to prove that there is an increased risk, and if it cannot do that then the cardholder should still contest the rate increase.

An official from the Financial Ombudsman Service stated: ‘We expect to see evidence that the card companies have actually assessed the borrower’s risk. Whenever we ask to see this information, we find that the card company moves to a settlement quite quickly.’

Many people fail to question unexplained interest rate and fee increases by their credit card provider, and as a result many end up paying for more than they need to on their credit card borrowing.

Tags: credit card charges, credit card interest rates, Credit Cards