Annual fees will come as standard on most credit cards by the end of the decade as lenders look to grow profits, one leading research company has said.
Defaqto claims that the UK credit card market could shrink significantly over the next few years - as consumers choose to switch to debit cards instead of getting hit by growing lenders' fees.
Barclaycard may soon introduce a fee of £20 for card holders who fail to spend enough on their card or who have not used it for a year. Inactive cards cost providers money, so Defaqto says it is likely that users who possess them will be hit with charges.
"Reports that Barclaycard is considering an annual fee is not a surprise and my expectation in the years ahead is that there will be a gradual move towards annual fees in the credit card market," David Black, Defaqto head of banking, commented.
"However this will herald a significant contraction in market size as people who clear their outstanding credit card balances on a monthly basis will, as they start facing annual fees jettison credit cards in favour of using debit cards instead."
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