By Elliot Wright, 19th January 2010
The UK Cards Association has today proposed a raft of changes
they hope will help consumers gain more control over their
finances.
The group, which represents all the major credit, debit and
charge card issuers in the UK including banks, has submitted
proposals to the Government which offer important enhancements to
the accounts of the UK's 30.2m credit card holders.
It is hoped that the new measures will help those who struggle
with payments as well as preserving the interests of the majority
who use the UK's 66 million credit cards responsibly.
The proposed package includes a change to the allocation of
payments practices, so that all payments above the minimum payment
are allocated to the most expensive - and potentially damaging -
debt first. This will benefit a quarter of all credit card
accounts.
A ban on unsolicited credit limit increases for customers facing
difficulties could also come into place to prevent those in trouble
falling deeper into debt. Any other customer offered a limit
increase will be offered a new 30-day notice period and a simple
means of 'opting-out'.
A ban on unsolicited credit limit increases
for customers facing difficulties could also come into place to
prevent those in trouble falling deeper into debt.
Companies will also be made to keep an eye on any customer who
repeatedly only makes the minimum repayment. This is the most
expensive way of paying off a debt and it is estimated that 3.1% of
card users pay the minimum for 12 consecutive months.
The Cards Association will also work with the Government to make
credit card accounts more transparent and simpler for
customers.
Melanie Johnson, Chair of the UK Cards Association says "The
credit card industry is keen to give consumers as much control of
their finances as possible. Our approach will deliver big
improvements to customers without smothering competition and
choice, which customers value and gain significant benefit from. It
will also maintain features which are vital to lenders being able
to lend responsibly."
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