29 October 2009

Time for credit and store card companies to clean up their act

Today the Government has announced we will take tough action to end unfair lending terms by credit card companies.

The action will mean:

• Banning the practice of increasing credit limits without prior consent

• Banning unasked for credit card cheques

• Placing restrictions on increasing the interest rate on existing debt

• Raising the minimum monthly repayments levels to encourage people to pay off their debt faster

• Changing the rules so that the most expensive debt on your credit card is paid off first. (Currently most credit card companies make you pay off the cheapest debt first.)

Supporting the move, Paul Murphy MP has called on credit and store card companies give people a fairer deal and prevent spiralling debts. The MP for Torfaen said:

“During this difficult economic time I want to do what I can to help local people manage their finances and cope with repaying their debts.

“What I hear about time and time again are complaints from people about unfair practices and rip offs.

“Whether its over the top charges in credit card bills, credit repayments or the high cost of credit on things like store cards, it's clear that something needs to be done to help consumers.

“What concerns me most is interest rates being increased without proper explanation. Consumers using their cards responsibly and making payments on time should not pay the price for excessive risk-taking by financial institutions. So I will push for the Government to ban or at least restrict the re-pricing of existing debt.”

Consumer Minister Kevin Brennan said:

“Card companies have to get their act together and do more for consumers.

“It is not acceptable for card companies to impose complex and confusing terms and conditions that can leave people baffled, or to increase interest rates without a proper explanation. Consumers have a real responsibility to manage their finances properly, but they also have a right to clear information to enable them to do that. Consumers should not feel each month as if they’ve been exploited or disadvantaged.”

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