Credit card debt: Govt advisor calls for credit card regulator

22/02/2010

Credit card debt could be eased as Ros Altmann, a former government advisor, has called for an investigation into the profit margins of credit card companies.

The BBC reported Mr Altmann as stating that credit card rates are "excessive" and that the advisor is arguing the case for the installation of a regulator to oversee this form of lending.

Mr Altmann's claims follow a report last week from Moneyfacts.co.uk, which revealed that credit card customers are paying the highest rates of interest in over a decade.

Despite the fact that the companies lending the money have access to finances at the historically low level of 0.5 per cent from the Bank of England, consumers are still being hit with average rates over 18 per cent.

Phil Perry, director of Ark Financial Planning, believes that the banks need to be kept in check when it comes to credit card lending.

Mr Perry said: "People keep saying they are trying to kick-start the economy, but they're not really. The banks' are really trying to get their profits back into play."

He added: "They think they might be doing people a favour by increasing the rates and stopping them borrowing. It is people that are still in that vicious circle that are going to get stung."

Kevin Still, director of EuroDebt, commented: "Credit card debt can be a significant problem for those people with several existing accounts carrying high balances from before the recession. Some of the massive increases in interest rates on clients that were previously regarded as a 'good risk' smack of blatant profiteering and fair weather lending.

"It is an uphill battle to clear debt when interest represents the majority of your monthly payment. Five to ten year managed debt solutions can look attractive when facing a repayment period of over 30 years by sticking to contractual minimum payments, which may be more than you can afford."

Posted by Fiona Smith

Tags; Income Worries and Debt,

Regional Debt Advice; Debt Advice Battle,

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