Credit card companies have been warned to lower their default charges or face the prospect of legal action.
The Office of Fair Trading (OFT) said unlawful penalty charges are costing consumers in excess of £300 million a year.
The OFT said the fines - imposed when a payment is missed or a credit limit breached - should only cover certain limited business costs.
It added that these principles also apply to other contracts such as those for bank overdrafts, store cards and mortgages.
We asked for your comments. This debate is now closed.
This isn't a zero-sum game. Squeezing one set of charges results in new or higher charges elsewhere. I've spent time in several EU countries where the banking industries are micro-managed by regulators. They try to impose "transparency" and "fairness" in pricing, and cap fees.
The unintended consequences are expensive annual fees and charges for lots for things that we take for granted here. Marketing innovations like cashback, charity cards, etc are all hard to find and access to multiple credit cards, and accounts, less common.
A single bank account and one credit card is typical because everything is charged for. There is a lack of competition as we understand it and little incentive to change banks or shop around. Colin, Germany
It's simple, check your balance and pay your bill on time, you get three weeks to pay it!
I work in a bank and am fed up with people complaining about charges, they're there to deter people from going over their limit or missing payments but like everything else people refuse to take responsibility for it and complain bitterly about the charges.
It's simple, check your balance and pay your bill on time, you get three weeks to pay it! Also, I don't get my charges refunded because I work in a bank! Jenny, Aberdeen
When you apply for a credit card you sign a clear set of terms and conditions. If you then break that contract you can't be surprised if the penalties laid out in that contract are applied. All this whining about charges being unfair seems like the usual 21st Century disease of everyone banging on about their rights but forgetting they also have responsibilities. Chris, Nottingham
I have been a loyal customer of my bank since I was very young. I'm 24 now and have been out of university for almost three years. I struggle to make ends meet each month, partly because I have a fair amount of debt I'm still repaying from my university days and partly because I am undertaking a costly MBA.
Last November, my bank charged me £38. The ridiculous thing is that the direct debit that tried to go through was for less than a pound. Since this charge, I have incurred a further 11 charges, all for £38. It's a vicious circle, the more I get charged, the less money I have, resulting in the increased likelihood that I won't have money to pay my direct debits. I don't see any light at the end of this tunnel. Peter Taylor
I received my credit card bill on Saturday morning, with a £20 charge for not making a minimum payment the previous month. As I did not receive a bill the previous month it is perhaps not so surprising that I didn't make a payment.
For this bank, trying to raise their short-term earnings has cost them two long-term customers
I am now going to close all my accounts (and my wife's) with the bank in question. In future, I will no longer do any business with any part of this particular banking group. For this bank, trying to raise their short-term earnings has cost them two long-term customers. Perhaps this is the only way they will learn. Garry, Cambridge
Most other places in the world charge you to have an account, and charge you when you spend money, write cheques or make withdrawals. I'd rather face a £30 charge than the thought of having to pay £5 a month for the actual account itself.
That being said, I too have been hit by "naughty" charges. I told my credit card company to change my direct debit details, they told me they had. So what happens? They try to take the direct debit out of the old account. So, I get charged! Thankfully my bank nullified the charge, and the card company backed down. But the next month it bounces again, because someone had changed the sort code, Result? I'm down £5 in various phone calls. Bottom line? Tighter regulation on the withdrawal of fees. Paul
Banks generally make inflated profits out of their customers. The Office of Fair Trading is correct to highlight this anomaly, which is effectively a stealth tax on banking customers. However it's explained away, anything over a minimum charge of £12 is vastly more than administration costs involved and is excessive. Dave
Bank charges have to be set at a level that deters customers from abusing account facilities. If you don't want to incur charges then you should adhere to the account terms and conditions. It's hardly rocket-science! Ronnie, Dundee
I was to be charged £55 for going over my overdraft limit. After reading advice here and on the linked Which? website I called my bank. I pointed out that I was a loyal customer and cited the OFT study over unfair penalties. After a few minutes they came back and cancelled the charges. It's definitely worth speaking to your bank before accepting these fees. Nick
In most cases, there is no excuse for going over credit limits or missing payment deadlines, especially in the case of credit card minimum payments. Direct debits can be set up to ensure these payments are made on time.
I can't believe that people are complaining about having to pay for their own mistakes
Considering that the UK is one of the few countries where you can operate a bank account free of charge, I can't believe that people are complaining about having to pay for their own mistakes! Additionally, to anyone who thinks that the major banks make their profits from UK retail customers, I suggest they take a closer look at the annual reports. Christopher Potts
I asked my bank to verbally explain the basis for charging. After the third repetition of the rule by the "customer services advisor" I gave up trying to understand and asked for it in writing. I'm still in the dark. You could conclude that you could take your business elsewhere, but all you end up with is another set of charges going to another bank, of a similar rate. Seems competition is not working here, so OFT ought to go in and shake up the industry. Steve Dixey, Cleethorpes
I agree that banks do charge a lot, but I do see their point of view as well. Banks have loaned money for centuries to enable people to have what they would not ordinarily be able to afford, but there are agreed penalties attached. So why should they suffer if people break those rules? It is too easy to criticise banks nowadays but most people would not own their homes without them. We live in a greedy society which forgets the basics, so do not overspend and you will therefore pay no charges. Lisa, Brighton
Definitely challenge the banks. I am probably in the minority here in that I endeavour to pay my balance off in full each month, but I have twice been charged (by two different card issuers) what I consider to be an unreasonable penalty. Both times, I have written to the bank protesting the charges, finishing off my letter with a simple sentence: "If you insist on charging me this outrageous amount, I will gladly cut my card in two, return it to you and take my business to one of your competitors". The charge was reversed on both occasions. Andrew Taylor, Surrey
The issue is not how much these companies charge but how similar the charges are. This is not about potentially illegal charges but an actual cartel and the price fixing around the £25 needs to be investigated. Peter Gregory, Skipton
I am furious with my bank. I thought a cheque I had sent four weeks before had been presented. It was a pure mistake. I was charged £30 each for two items which made my account overdrawn for a few hours, and a £28 unauthorised overdraft fee, a total of £88.
It will not have a penny of my money again and I have banked there for over 40 years
Janet Staples, Grantham
When I protested it removed one of the £30 charges but told me the bank thought it had to take a stand against people like me. When a bond I have there matures in July, it will not have a penny of my money again and I have banked there for over 40 years. Janet Staples, Grantham
For far too long now, banks and credit card companies have been allowed to get away with high charges. It is about time banks used some of their huge profits and gave something back to the customer by cutting charges or lowering the APRs!
I'm in dispute with my bank about charges of over £2,000. I've used the standard letters to dispute them. Its response has been the usual weak justification that your programme has highlighted and also to suggest that, if I were to go to court to dispute the charges, they'd just close my account because "the relationship between bank and customer would have... irrevocably broken down".
Why should I have my account closed to get back the money I am owed?
Stuart Bagnall, Newcastle
Apart from the excessive charges, I have no particular complaints with my bank so I'm therefore in a dilemma: I know that my chance of success through the county court is pretty good, but why should I have my account closed to get back the money I am owed? Stuart Bagnall, Newcastle
I have successfully challenged charges under the Unfair Terms rules via the courts seven times since 1999 for sums totalling £5,163. Boringly, all the organisations concerned gave in immediately that they received my claim from the courts. On a few other occasions I got my money back without the need for court action. Bryan Brown, Woking
Even at £12 this is way over the top for a customer who fails to make a payment by the required date.
A late payment charge of the amount as suggested by the OFT should only be made if the credit card provider has to send a letter to the customer and this should only be sent after the monthly credit card statement has been produced. Martin Gosney, Bristol
I once was in a situation where I was a little late in making a payment so the credit card company instantly slapped on a charge that then took my balance over its credit limit. So then they charged me another £20 for going over my credit limit! If you didn't laugh... Russ Higgins, Coventry
The OFT needs to stop them from moving the charges to other "services"
Daniel Austin, Manchester
It's another tax! People who go over their limit have a cash flow problem and this won't be fixed by
excessive bank charges. The OFT needs to stop them from moving the charges to other "services". Daniel Austin, Manchester
I've just been charged £30 for going 10p over my limit. This is ruthless, and very mean. I am not happy at all. The banks will always get greedier and greedier, nobody will stop them.
These measures are too weak. The OFT should also take on the banks. I once complained that the financial penalties I incurred when I went briefly overdrawn whilst abroad on holiday were greater than the fine I would have received had I assaulted someone in the street. Much good it did me. The OFT needs to take a firmer stand against these charges. John Hyder-Wilson, Worthing
This is a response to your suggestion that customers will pay the price of limiting charges. Yes, my credit card company has just increased its interest rate from 15.9 to 16.9%. As the base rate has not increased, I conclude this is to mitigate anticipated loss of excess fees. Giddy, London
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