For too long now many banks and financial companies have marketed credit cards with extremely high interest rates and charges, and because the credit has been so easy to obtain many vulnerable people have fallen into the “credit trap”. Companies have continued to “push” credit card debt, as highlighted by some research which identified that 5.7 million people had their credit card debt extended last year “without their prior consent”.
It is worrying that many vulnerable people, those who are unable to manage their finances responsibly, are being given further credit, especially at such high rates of interest. But now things are set to change as the Government announce changes to the regulation of companies who provide credit card products. In particular some of these changes will address the following points:
- The minimum monthly payment will be increased to encourage faster repayment of debt, thus reducing the overall amount of interest paid.
- Consumers will be given the choice to pay off more expensive debt first rather than allow charges to accrue.
- Increases in credit limits can only be made with customer agreement.
All of the changes proposed will be subject to consultation however it is expected that the “new rules” on credit cards will be in place during 2010.
