Credit Card Debt to be Restricted
The Government aim to stop people getting into further credit card debt by stopping credit card companies from raising unrequested credit card limits, and to ban the sending out unsolicited credit card cheques.
Credit card cheques may mean that their customers get into further credit card debt as these often carry a higher charge than using your credit card. The Office of Fair Trading (OFT) called for new regulations in 2006 which now means that there is a code of practice where by credit card companies agreed to “assess a customer’s suitability before sending credit card cheques” and provide accurate information about any costs.
The Government believes that restricting the use of consumer credit will promote a more responsible attitude to credit card lending, and the UK can hopefully start to see an decrease in the amount of personal credit card debt.
Consumer Affairs Minister, Gareth Thomas, commented: “We are concerned that people may be tempted to borrow irresponsibly if credit card companies increase borrowing limits without this being requested by customers, or send out unsolicited credit card cheques.”
Fighting back against the suggestions that credit card companies are encouraging deeper levels of credit card debt, UK payments association Apacs said that its members did not raise the credit card limits of borrowers with unaffordable debt problems.