The UK Cards Association, which represents the
country’s credit card industry, and the UK government have agreed a
range of measures which they say will save consumers millions of
pounds and give them more control over their finances.
The measures agreed are that by the end of the
year:
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- Repayments will be allocated to the highest rate debt
first; - The minimum repayment for new credit cards will at least cover
interest, fees, charges and 1 percent of the outstanding
balance; - Consumers will have the right to reject credit limit increases
and to reduce their limit; - Credit card customers will have at least 60 days to reject a
rate increase, close the account and pay down the balance at the
existing rate; - Cardholders at risk of financial difficulty will be protected
by a ban on increases in credit limit and a ban on increases in
interest rate, and - An annual statement will be provided that enables easy
comparison with other providers.
In future, card issuers will contact any
customer who repeatedly only makes the minimum repayment, to make
clear that this is the most expensive way of paying off a debt (an
estimated 3 percent of customers pay the minimum for 12 consecutive
months).
“All of these changes are good news for
hard pressed consumers as they will alleviate some of the lesser
known tricks of the trade that have proven extremely costly to
those that don’t repay their entire balance every month,” said
David Black, a spokesman for bank consultants Defacqto.
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