New Rules For Credit Cards Proposed

• News
• Published: 02 Jul 2009 in Money and Credit Cards

The Government has announced plans which could ban credit card companies from raising credit limits without a customer's consent.

The proposal was set out in its Consumer White Paper, which aims to promote responsible lending and help prevent people running up unaffordable debts.

Also included in the document are restrictions on card providers increasing interest rates on existing debt.

As part of the review of the credit and store card industry the Government will consider whether minimum monthly repayments should be increased to help people repay debt quicker, and the order in which debts are repaid to ensure that the most expensive is paid first.

Under the review credit card companies sending out unsolicited credit card cheques, where the value of the transaction is added to the borrower's card balance, will be banned as interest on cheques is often far higher than that on a credit card.

The Office of Fair Trading has been asked to carry out a review into the market for high cost credit, such as pay day loans and door step lending, which typically charge interest of more than 50% on an APR basis, as part of government efforts to control consumer debt.