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"Consumers can benefit from contesting credit card fees"

By admin | November 14th, 2009 | Credit Cards

Many credit card firms have increased credit card interest rates for customers without any explanation or reason in a bid to make more money from the consumer.

However, a recent report has suggested that consumers should always contest any unexplained credit card interest rate increase with their provider, as there is a good chance that the card provider will back down on the rate rise if there is no explanation for why the rate was increased in the first place.

The Financial Ombudsman Service has revealed recently that in all of these cases where consumer contested a credit card rate rise the providers had been unable to provide any reason or explanation for the rate increase.

Because of this many of these borrowers had their base interest rates reduced back to their original levels again. The FOS said that banks cannot simply say that the cost and risk of lending consumers money has increased by way of explanation.

An official from the FOS said: ‘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.’

Lenders would have to prove that the consumer has become a higher risk, and consumers would have the right to get the provider to prove this and see evidence.

A number of consumers have contacted their credit card providers about unexplained rate increases, and the lender has then put the rate back down again as a result of not being able to explain or prove why they rate had to be increased. However, those that do not bother to contact the card provider simply continue to keep paying higher rates possibly for no reason.

Tags: credit card charges, credit card fees

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