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Coalition considers cap on credit card interest

Coalition considers cap on credit card interest

Category: Credit cards

Updated: 15/10/2010
First Published: 15/10/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Interest rates charged on store and credit cards could be capped after the Government launched a review into consumer borrowing.

The Consumer Minister, Edward Davey, and Financial Secretary to the Treasury, Mark Hoban, have asked industry experts for their opinions as to how people can get a fairer financial deal as part of the Government's review into consumer credit and personal insolvency.

The Department for Business and the Treasury wants to establish how people can get a fairer deal when borrowing money, and if they can manage their borrowing better. The review will also determine how best to improve the help available to those who run into financial difficulty.

The call for evidence invites people to have a say on how the existing consumer credit and personal insolvency regimes might be improved and seeks views on a number of commitments made by the Coalition.

As well as asking for opinions on providing a regulator with the power to cap interest rates on credit and store cards, the Government also wants to tackle unfair bank charges and introduce a seven-day cooling off period for store cards.

It is also considering asking credit card providers to make electronic statements available to consumers so they can judge whether an alternative credit card would provide better value for money.

"Well-informed, empowered consumers are central to our vision for how a credit market between customers and lenders should work," said Consumer Minister Edward Davey.

"I want to encourage both to take responsible decisions and to strengthen protection where necessary - particularly for the most vulnerable.

"If things go wrong people face a confusing array of debt remedies, so I also want to examine how the existing insolvency regime can be made to work better."

Following the call for evidence, the Government plans to publish its proposals from the results of the review in 2011.

If you're in debt and struggling to keep up with repayments, debt advice specialists such Debt Free Direct offer free and impartial advice to those with debt problems. Helpful information can also be found in Debt Free Direct's Debt Advice Guide, Debt Management Plan Guide and IVA Guide, which can all be downloaded for free.

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