That’s correct, you read it right. I felt a sort of roaring in my ears, no doubt from all the blood rushing around calculating how much I’ve paid in credit card penalties, as I read Don’t be afraid of throwing down the gauntlet to banks in the Guardian’s Saturday Jobs & Money supplement.
Here’s what Richard Colbey, a barrister (tr. for US readers: top-flight lawyer) wrote: Last month I wrote in Jobs & Money about the late payment charges made by most credit card companies. These typically involve the levying of around £25 on the account of someone who pays a day late, even if this is caused by the company’s late dispatch of the bill.
Such charges are unlikely to be enforced by the courts: penalty clauses are legally void unless they reflect the loss the party enforcing them has suffered.
Did you get that? All those penalty payments they put on you for late payment are bogus. Unenforceable.
But you’re thinking, come on, it must be in the contract. Colbey responds: This is hardly cutting edge law. None of the dozens of banks who issue UK cards, and who will lose out if people follow my advice not to pay them, has contacted Jobs & Money, or me, to take issue with what I wrote.
Over the years I have had a few of these penalties levied, and invariably when I have refused to pay I have been told that the charge would be “refunded” usually as “a good will gesture”. If banks thought this argument wrong, they would have taken a test case through the courts to establish their entitlement to the money.
Are you starting to follow? And then he makes the point that this applies too to those “unauthorised overdraft” charges your bank makes.
So why haven’t you heard about this? Simple – because when individuals act against the banks, they keep it quiet. Most people are cowed into paying the penalty because they think it’s enforceable. It just needs us all to refuse, and suddenly they’ll either have to take us all to court (great for customer relations) or do something else.
OK, so this is a rallying cry. Tell your friends. I’m starting today. No more penalty charge payments by me.