Credit card users avoid double duty

By David Clerkin

But the charge itself lives on despite calls for its abolition from banks and consumer groups.

The Irish Bankers’ Federation (IBF) and the Consumers’ Association of Ireland (CAI) welcomed the elimination of the double hit, which they said had undermined consumer choice and hindered competition in the credit card market.

IBF chief executive Pat Farrell said the change would make it easier for consumers to switch card providers if they saw a better deal elsewhere.

“We believe that consumers are being afforded full opportunity to avail of the increasing range of choice that exists in the financial services market today,” he said.

Last year’s Budget brought in a change that made cardholders liable for the €40 tax even if they only held a card for part of a year.

In the past, the charge was levied if the card account was active on a particular date, so customers who closed their old account when opening a new one only paid the tax once.

Finance Minister Brian Cowen said last year’s change had been a “side effect” that had acted as “a barrier to competition between financial services providers”.

Credit card users will be more likely to shop around and change cards because they no longer face an extra €40 stamp duty, once they cancel their old card.

But Mr Cowen resisted calls to abolish the tax outright. The IBF had argued before the budget that the duty put people off the move from cash to electronic payments by penalising them for holding cards.

The Government levies an annual charge of €10 on users of ATM cards, while holders of Laser cards, which allow them to pay for goods by debiting their bank accounts, pay €20 each year.

CAI chief executive Dermott Jewell welcomed the announcement but said the €40 duty should have been scrapped completely. The change will only take effect when the Finance Bill is published in the new year.