BANKS and building societies have made more than £1 billion extra profits by introducing higher fees on credit cards to offset an official crackdown on penalty charges.

Hundreds of thousands of customers are being charged up to £24 a year just to use their cards, according to the consumer group Which?. Other tactics involve penalising customers for not using their cards enough and even charging them for failing to provide a change of address.

It is more than a year since the Office of Fair Trading (OFT) introduced a cap of £12 on the charges levied when people miss their credit-card payments. This has led to a rush by providers to find other ways to boost revenues.

Barclaycard, Britain’s most popular credit card, is planning to charge up to a million inactive customers between £12 and £24 a year simply for leaving their cards in their wallets.

By increasing annual percentage rates, balance-transfer fees and cash withdrawal rates, card companies have generated £1.2 billion in extra profits over the past 12 months, according to research by comparison firm Uswitch. This is four times the amount estimated to have been lost as a result of the OFT crackdown.

Here we name some of the worst offenders and suggest the best ways to avoid their profit-raising tactics.

Usage fees Card firms have been squeezing extra money out of customers by charging annual fees. Northern Rock was one of the first to introduce an annual fee of £2 a month, or £24 a year, on its Base Rate Tracker credit card. The Cooperative Bank, which portrays itself as a consumer champion, has followed suit.

Other providers have introduced penalty fees for “inactive” customers. In February, Lloyds TSB imposed a £35 penalty on 50,000 customers who had not used their card for some time.

MBNA has also told customers they face a £10 fine if they have an outstanding balance but haven’t used their account for a year. Both lenders claim the fees are a one-off charge.

To avoid fees altogether, advisers recommend Sainsbury’s Bank Mastercard. It offers 0% on purchases for the first 12 months and charges a low rate of 5.9% on balance transfers.

Balance transfer costs Banks have been hiking their transfer fees to punish consumers who switch their credit-card balances to cheaper deals. Charges have gone up from a typical 2% to 2.5% or more.

Halifax has raised its charge from 2% to 3%. Many providers have also removed the cap on the maximum fee they charge. John Lewis and Waitrose Mastercards and the Yorkshire Building Society’s Classic Visa still impose a cap. Both offer a six-month 0% deal and charge a 2% balance transfer fee but have a £50 limit.

Holiday rip-offs When you use your credit card abroad most firms levy a foreign loading fee of about 2.75%. If you withdraw money from a cash machine overseas you will also be charged a cash-withdrawal fee.

NatWest, Royal Bank of Scotland, Mint, HSBC and Sainsbury’s Bank have all hiked their charge to 2.5%, with a minimum of £2.50 for making cash withdrawals abroad. Others, including Capital One, Egg, British Airways and MBNA have increased the fee to 3% and a minimum charge of £3.

Nationwide and the Post Office are best for overseas spending because they do not charge foreign loading fees.

Order of payments Several firms, including HSBC, and its subsidiary First Direct, have changed the order of repayments to boost the amount of interest. The payment hierarchy means you pay off the cheapest debt first, leaving you to accrue interest at the highest rate on the outstanding balance.

One way to avoid being stung is to go for a provider such as Nationwide, which promises to allocate payments to the most expensive debt first.

Old address fees Royal Bank of Scotland has started charging credit-card customers £12 if they fail to tell it that they have moved house.

NatWest, Royal Bank of Scotland and Mint – all part of the RBS group – charge the penalty if they have to trace a customer because he or she has failed to tell the bank they have moved.

It's a cheek to charge for not using a card

TIM MATTHEWS, an information technology consultant from Wimbledon, southwest London, is fed up with Barclaycard.

Matthews, 28, has had a Barclaycard for about a year but is now planning to switch because he is angry about a fee that the company plans to impose on ‘low usage customers’ like himself.

He is thinking of moving to a Nationwide credit card instead as he travels abroad a lot.

He likes the fact that Nationwide doesn’t charge a foreign loading fee when the credit card is used overseas.

Matthews said: ‘I think it’s a bit of a cheek to ask people to pay extra if they don’t want to use their cards.

‘I do use the card quite a lot but there are long stretches when I don’t, so I don’t want to take the risk of being hit by this penalty fee.

‘For the past year I have been a loyal customer – so this is a slap in the face.’