You’ve found a flight, hire car, concert tickets, all at the right price, only to then find out that the company wants an additional fee for paying by credit card. Well from January next year,  surcharges for paying by plastic will be dropped completely.

According to the Treasury, consumers spent an estimated £473m on such charges in 2010. The worst offenders often being airlines, booking agents, and small businesses.

Speaking on the upcoming ban, Economic Secretary to the Treasury, Stephen Barclay, said:

“Rip-off charges have no place in a modern Britain and that’s why card charging in Britain is about to come to an end.

“This is about fairness and transparency, and so from next year, there will be no more nasty surprises for people at the check-out just for using a card.

“These small charges can really add up and this change will mean shoppers across the country have that bit of extra cash to spend on the things that matter to them.”

Taking consumer rights  step further

Credit card surcharges are already covered under the Consumer Rights (Payment Surcharges) Regulations, which came into force in 2013 and state that companies should only use a surcharge to cover its own costs, however many consumer groups believe that businesses are ignoring this legislation.

Changes to surcharges were originally set out in the the EU’s wide-ranging Directive on Payment Services (known as PSD2) due to be implemented in UK law from January 13, 2018, however the Government plans to go one step further by also banning charges on American Express, Paypal, and Apple Pay too.

While consumer campaigners welcome the news, there are warnings that some retailers might increase their prices to make up the lost revenue. Banks typically charge large retailers between 10p and 20p for each debit card transaction, or 0.6% for credit cards. However, the likes of Ryanair and Norwegian Airlines charge customers 2%, and take-away apps Hungry House and Just Eat, charge 50p (amounting to 5% on a £10 order). But it’s not just retailers that have been raking in cash from these surcharges. Some local authorities levy charges of up to 2.5%, and the DVLA will also have to change its card payment policy which sees it add £2.50 to vehicle tax payments made by credit card.

Cashback on credit card spending

Moneysaving Answers previously ran an article about how self-assessment tax payers to earn money when paying their HMRC tax bill via a cashback credit card. Shortly after publication, many credit card companies slashed their cashback offers, but the trick might now be viable again as HMRC charges which range from 0.374% to 2.406%, depending on whether it is a personal or corporate card, will also need to be dropped  from 13 January.

Unlike the capping of the ‘inter-change fee’ the abolishion of these surcharges is unlikely to affect credit card issues, as surcharges are at the discretion of the retailer. This could mean, that American Express cards like the Amex Platinum Cashback Everyday, that offers up to 5% cashback, now make for a more compelling proposition.

Like this article? See our guide to earning cashback on your shopping

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