Credit cards Updated:
New proposals to ensure that credit and store card companies give people a fairer deal have been announced by the Government.
Amongst the suggestions put forward is the raising of minimum monthly repayments levels to encourage people to pay off their debt faster and banning the practice of increasing credit limits without prior consent.
A change in the rules that set out the order in which debts built up on a credit card are paid off has also been called for, so that the most expensive debt is settled first rather than last.
Meanwhile, concern about interest rates being increased without proper explanation means the Government is also considering banning or restricting the re-pricing of existing debt.
"For far too long the card companies have been able to get away with practices that are not in the best interests of the consumer," said Michelle Slade, spokesperson for Moneyfacts.co.uk.
She added that many consumers are unaware that on most credit cards, the most expensive debt is paid off last, while some companies had recently reduced the minimum payments it customers were required to pay.
"This will only store up problems in the longer term, as the total amount the consumer ends up paying will be much greater," she explained. "Increasing the minimum repayment will reduce both the total interest paid and the time it takes to clear the debt and will have a positive impact for most customers."
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.