Credit card rate caps 'not needed'

06/05/2009

A recent US law which imposed strict limits on rates offered by credit card providers could be adopted in the UK, it has been suggested.

The US "rate cap" reforms were passed by the House of Representatives in Congress last week - and are now likely to become law.

However, according to a new blog posted at financial news source Citywire, such a move might not work in the UK.

This is despite the fact that credit card rates in the UK have actually increased recently, flying in the face of interest rate cuts from the Bank of England - which in theory make borrowing cheaper for credit card providers.

In recent months, the Bank has cut its lending rate from five per cent to 0.5 per cent.

The Citywire blog also suggested that consumers bear some responsibility for running up debts on high-interest cards - and might be better advised to steer clear of them altogether.

Deborah Hyde, the blog's writer, added: "The main issue for me is that people should revisit their spending behaviour, to realise that they do not 'need' to buy designer labels and refurbish their home every season.

"The answer is to make people understand budgeting, interest rates and the economy - not to keep penalising companies and letting consumers absolve themselves of responsibility."

Tags; Debt Management and Banking, Young Family Finances, Credit Card Lifestyle,

Regional Debt Advice; Debt Advice Hyde,

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