Commission warns on credit card fees

Photo / Amos Chapple

The Commerce Commission has warned credit card companies against charging late payment penalty fees of more than $15.

The commission has been investigating late payment and over-limit fees on credit cards issued by American Express International (NZ), ANZ National Bank, ASB Bank, BNZ, Kiwibank, TSB Bank, The Warehouse Financial Services and Westpac New Zealand.

In the middle of last year a number of them voluntarily dropped their late payment fees, which had ranged from $20 to $25, to less than $15.

The commission today said it was unlikely the higher range of fees could be justified as reasonable.

It believed the companies had breached the Credit Contracts and Consumer Finance Act by generally generating profit in addition to recovering the actual costs of late payments, and was also using the late payment fees to recover bad debt.

Various costs also appeared to have been included in the fee which were "too removed from the act of late payment to be properly recoverable in this way".

A late payment fee of $15 or less was likely to be justifiable but it was "drawing a line in the sand", said the commission's Auckland fair trading manager Graham Gill.

Any late payment fees at or below $15 should not trigger future investigation or enforcement action.

"Credit card issuers charging in excess of $15 may be liable to further action by the commission."

The investigation into late payment fees has now concluded, while the investigation into over-limit fees continues.

- NZPA