Fairer credit cards and action on bank charges
New plans have been announced by the government to ensure that consumers get a fair deal from credit card companies and stop unfair practices and exploitation.
Chuka is backing the changes, having campaigned on the issue after hearing complaints from local people about credit card rip offs.
The rules would mean that companies will have to pay off customers’ most expensive debts first.
This is to prevent the practice of ‘negative payment hierarchy’ whereby consumers can get stuck in debt by only paying off the portion borrowed at the cheapest rate. This change could save thousands of pounds for people paying off credit card debts.
Companies are also set to be banned from increasing credit limits without consent, sending unsolicited cheques or increasing interest rates on existing debts.
In future, they will be required to give consumers a full and proper explanation of how a card works before making an agreement.
The government is also intervening to help customers who are seeking refunds for excessive bank fees and charges.
There are more than one million reclaim requests for excessive charges which have been on hold since 2007, with a test case brought by the Office of Fair Trading currently going through the courts.
The Prime Minister has called on banks to resolve the outstanding claims without further delay.
