Credit Card Firms Will Have To Do More To Assist Borrowers
January 14, 2009
Following a recent meeting with the Business Secretary Lord Mandelson, officials from the credit card industry have pledged to try and assist struggling borrowers more through the deployment of a number of measures. Over recent weeks credit cards have hit the financial headlines a number of times, namely because of the high rate of interest charged on borrowing despite the aggressive base rate cuts, and because of increases in various other related fees and charges.
The high cost of borrowing on credit cards has even captured the attention of the Prime Minister, Gordon Brown, who has intervened and stated that credit card firms have to stop fleecing consumers and start treating them more fairly, particularly in the current financial climate. The base interest rate has been slashed to just 2 percent over the past few months, but officials state that interest rates on credit cards has been rising over that period.
Part of the meeting with Lord Mandelson focussed on the use of risk based interest rates, which would be set according to the likelihood of the borrower defaulting on repayments on the debt. Credit card companies have also agreed that they will wait at least thirty days before starting any debt collection proceedings providing the borrower is working with a debt advice official in order to try and find a solution towards making repayments on the debt.
Consumer Affairs Minister Gareth Thomas stated: “The government is deeply concerned that borrowers aren’t getting a fair deal. That’s why we’ve taken swift action to bring the industry in to look at how costs are being applied to people’s existing debts.”
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