Government tackles 'unfair' credit card practices

27/10/2009

The government is to launch a crackdown on credit card firms in order to allow borrowers to solve their money problems more quickly.

Among the proposals put forward by the Department for Business Innovation and Skills (BIS) today (October 27th) are the raising of minimum monthly rates and restrictions on interest rate hikes for customers who are still in debt.

A change to the "order of payment" rules on a card, which would see customers paying off their lower-rate debts before their higher-rate debts, is also planned.

The BIS will now go out for consultation, meaning that views from the credit card industry will be sought before concrete action is taken.

Consumer minister Kevin Brennan said: "My view is clear, the current relationship between card companies and consumers cannot go unchallenged. It is simply not fair."

Melanie Johnson, chair of The UK Cards Association, commented: "Before we tell government of our concerns that these new proposals could lead to some customers having a lot less choice and to extra costs for many of them, we will be reviewing the evidence and we expect the government to do the same."

The BIS plans also include the banning of the practice of some credit card providers, whereby credit limits are increased without the customer being consulted first.

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

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