Annual fees on credit cards are set to return in a move that could hit the pockets of consumers by up to £35 a year, according to a report by leading financial consultants PricewaterhouseCoopers (PWC).

The report predicts that banks will reintroduce yearly fees in an attempt to recover £1 billion in lost profits which has come about as result of the Office of Fair Trading's crackdown on penalty charges and rising bad debts.

A ruling by the Office of Fair Trading earlier this year restricted the amount banks could charge it customers who defaulted on credit-card repayments to a maximum of £12.

In addition, PWC believes the ongoing investigations into the amount retailers pay on credit card transactions and payment protection insurance (PPI) is likely to add to the pressure on card issuers.

The report revealed that banks are now earning half as much revenue per card compared with five years ago. One reason is the rise of the so-called rate tart – customers who constantly move debt from one deal to another.

Richard Thompson, a partner at PwC, said: "With fierce competition and rising bad debts already hitting issuers, it is hard to see how the banks will absorb £1 billion of lost revenues.

He added: "To put it in perspective, card issuers would have to levy annual fees costing the average credit card user £35 a year to recoup the potential £1 billion loss.