The Government has unveiled plans that aim to get consumers a fairer deal from credit and store card companies.
Consumer Minister Kevin Brennan announced the start of a consultation on proposals such as banning the automatic increase of credit limits and raising minimum repayment levels to encourage people to pay their debts more quickly.
- Take part in the consultation
Speaking in his podcast at the weekend, the Prime Minister said the measures were part of plans to ensure that there was no repeat of the current financial downturn.
He said:
“This week we are announcing measures to make the credit and store card companies clean up their act - to get you a fairer deal. Sharp practices by lenders - such as hiking interest rates on existing debts without explanation, sending out unsolicited credit card cheques and raising credit card limits without being asked - these sharp practices should end.”
Proposals in the consultation include:
- Changing the rules that set out the order in which debts built up on a credit card are paid off
- Raising the minimum monthly repayment levels to encourage people to pay off their debt faster
- Banning the practice of increasing credit limits without prior consent
- Placing restrictions on increasing the interest rate on existing debt
The credit and store card consultation runs until January 19.
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