Everett Group

News

17 March 2010 New credit card rights ‘could save consumers £300m’

Consumers are to be given more control over their finances and greater protection against credit card firms, under new plans announced by the Government.

Prime Minister Gordon Brown has unveiled a package of measures as part of a clampdown on the credit card industry. It comes after an agreement was reached between the Government and credit and store card companies.

Under the agreement, payments will go towards debt with the highest interest rates first, thereby reversing current industry practice which prevents card holders from clearing their most expensive debt until after the lower rates have been repaid.

In addition, consumers will gain the right to choose not to receive credit limit increases in the future as well as the ability to reduce their limit at any time. Card users will also have better automated payment options.

Other reforms include granting customers more time to reject increases in their interest rate or their credit limit, and providing consumers with an annual statement that allows for easy cost comparison with other providers.

It is hoped the changes, which experts say could save consumers around £300 million, will ease the pressure on customers struggling to cope with credit card debt.

‘Step by step, we are reinventing the financial services industry after the global financial crisis and moving the balance of power back towards consumers,’ said Gordon Brown.

‘These new rights will put an end to the irresponsible lending practices that people have been most concerned about, and help cut the cost of borrowing.’

The new rules are expected to come into force later this year.