EU Move To End Free Banking With Introduction Of Annual Card Fees
Thursday, 18 July 2013
As hidden fees for transactions look set to be scrapped, a report warns consumers that the cost will be passed on to them in the form of annual fees for the privilege of having a card. These fees are suspected to be as much as £11 for debit and prepaid cards and £25 for credit cards, designed to make up for expected losses of up to 2.4 Billion for banks and issuers.
These charges would effectively end free banking throughout the Eurozone, however it will be in the UK, where a long standing a culture of free banking exists, that there is likely to be most objection to the move by consumers.
Europe Economics, a research consultancy looking into the proposed interchange fees changes, concluded in their report that fees and charges would ultimately be passed back to the consumer, much like in Australia and Spain where fees were restructured in a similar way.
In both cases, the changes brought a significant hike to card fees and interest rates, which in Spain lead to an increase of 27% on fees and charges, with an increase in prices by retailers of 25%.
The report concluded that although the move to remove the hidden charges with set annual fees could save retailers as much as 2.2 billion pounds, there was no evidence to suggest that these retailers would pass on savings to end consumers through lower prices.