Government to Crackdown on the Credit Card Industry

The Government is reported to want to Crackdown on the Credit Card Industry

The Government is reported to want to Crackdown on the Credit Card Industry

It looks likely that the government will soon introduce legislation to crackdown on the credit card industry. Proposed legislation will hopefully put a stop to credit card companies increasing credit limits without a direct request from the customer. In the past credit card providers have increased the amount a client can borrow by just writing and informing them of the increase.

It is believed that Ministers would like to see unsolicited credit card letters offering their customers cheques to spend on whatever they like being banned. Back in 2006 the Office of Fair Trading and the government decided to apply pressure to the credit card industry in an attempt to control the practice of mailing out blank credit card cheques to customers.

Apacs the UK trade association for payments reckons that its members the credit card companies have not raised the credit limits of borrowers with financial problems. The problem is they don’t know who these people are that are in debt as most of them are in debt to a multitude of credit card companies. Credit card cheques are seen by these people as a way of buying some more time or just giving themselves some breathing space for them to refinance their debts. Unfortunately these credit card cheques increase the outstanding debt that is owed they only delay the inevitable situation of how to pay off the debt off.

It’s little wonder that the outstanding credit card debt has reached £53 billion when the credit industry has thrown money at customers in the hope that they go on a spending spree. Credit card cheques are more expensive then paying for a product or service by using your credit card. The card owner lose their protection against their goods being faulty or an airline going bust if they pay by cheque,

Let's hope they hang them out to dry!

Let's hope they hang them out to dry!

As the Bank of England  have plummeted credit card interest rates have remained high. The excuse provided by the credit card companies is that interest rates need to stay high in order to cover the bad debt from people who have an Individual Voluntary Arrangement (IVA), Debt Management Plan or in extreme cases where people have gone bankrupt

Recently I spoke to a reader who had sent their credit card company their monthly payment for £192.00 and they had forgotten to send the four pence that was requested by the credit card company when they asked for £192.04. They lost their zero percent deal immediately for not paying the amount requested and they were put on a 23.9% deal with no other deals available. They also received a letter from a debt collection agency requesting the four pence. They phoned the debt collection agency who did not seem bothered but said that if they did not want to pay the four pence then the debt with them would rise and in a few months time it would be more than £100.  I fear that we now have the lunatics controlling the Asylum.

It is reported by the Consumer Credit Counselling Service (CCCS) that they are seeing more affluent people seeking help with mounting debt problems as this recession bites. They also said that the debt problems they were seeing affected a wider cross section of society and were more complicated and harder to resolve than previous years. Of those people seeking help from the CCCS almost half were homeowners and they generally owed 83% more than people who rented their homes.

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