One of the measures that the government is bringing in is to stop credit card firms from automatically increasing customers’ credit limits. At present credit card providers review the accounts of customers periodically and then increase their limits accordingly, letting them know by post. However, whilst the customer may not have really wanted the credit limit increased once this is done the temptation is there to spend on the card, which puts the cardholder even deeper into debt. The government wants this practice to stop, and for credit limits to be increased only at the request of the cardholder.

Another thing that many credit card providers have been doing over recent years is sending out credit card cheques to customers, which can then be written like normal cheques. Customers can even write themselves a cheque and put it in their bank, with the amount then coming off their credit card. However, many do not realise that they are then charged high credit card fees for using the cheques. This is something else that the government wants to put an end to.

The Consumer Affairs Minister, Gareth Thomas, said: “We are concerned that people may be tempted to borrow irresponsibly if credit card companies increase borrowing limits without this being requested by customers, or send out unsolicited credit card cheques. It’s vital we protect consumers at this time and we are exploring these issues carefully.”

Credit Card Providers To Face Further Clampdown is a post from: Credit Cards Bureau

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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.”

• Consumers Should Fight Credit Card Increases
• Affected By The Economic Turndown
• Credit Cards To Hit £ 7 Billion

Credit Card Firms Will Have To Do More To Assist Borrowers is a post from: Credit Cards Bureau

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