Credit card fees on their way back

With regulators cracking down on credit card charges, increasing numbers of firms are bringing back annual fees for cardholders.

Currently one credit card company in eight has at least one card which charges an annual fee, figures from MoneyExpert.com reveal.

But this is set to rise. Morgan Stanley and Co-operative Bank have said they will charge for some of their credit cards with Lloyds TSB now charging £35 a year for customers who do not use their cards regularly and Barclaycard considering introducing a £20 fee.

The highest fee currently charged is £275 a year, with the lowest annual charge £24.

"We thought we'd seen the end of annual fees on credit cards, but we think there could be a return sooner rather than later," said MoneyExpert chief executive Sean Gardner.

"Credit card companies will be under pressure to improve profits and reduce bad debts, and that could mean finding customers who are prepared to pay for credit.

"Many of the fee-charging cards are aimed at the well-off who want exclusive deals. But there are also signs that other providers are introducing fees for people who don't use their cards enough."

But people faced with fees should not simply pay up, with dozens of cards still available free, and cards with fees not giving customers any financial benefits which are not available elsewhere for free.

Just two fee-charging credit cards offer introductory deals on balance transfers or purchases, only one offers cashback and three have a shopping reward programme.

By contrast, there are 156 free cards offering 0% balance transfers.

Instead, incentives to pay for your plastic are things like a concierge service, airport lounge facilities, medical insurance, refund protection and guaranteed hotel accommodation.