30m credit card customers get new government protection.
Article by Paymex 15th Mar 2010 00:00
The Department of Business, Innovation and Skills (BIS) has announced 5 new consumer protection measures for people who have credit cards
The five new rights for credit card users agreed by BIS with the UK Cards Association and the Finance and Leasing Association (representing store card companies) are:
• Right to repay: consumers’ repayments will always be put against the highest rate debt first. For consumers opening new accounts the minimum payment will always cover at least interest, fees and charges, plus one per cent of the principal to encourage better repayment practice.
• Right to control: consumers will have the right to choose not to receive credit limit increases in future and the right to reduce their limit at any time; and consumers will have better automated payment options. Consumers will be able to do both of these online.
• Right to reject: consumers will be given more time to reject increases in their interest rate or their credit limit.
• Right to information: consumers at risk of financial difficulties will be given guidance on the consequences of paying back too little; and all consumers will be given clear information on increases in their interest rate or their credit limit including the right to reject.
• Right to compare: consumers will have an annual statement that allows for easy cost comparison with other providers.
In addition, consumers who are at risk of financial difficulties will be protected through a ban on increases in their credit limit as well as the ban on increases in their interest rate.
Nick Pearson spokesman for debt solutions experts Baines and Ernst commented “these new measure are to be warmly welcomed and should provide valuable protection to all credit card holders, particularly those who are experiencing financial difficulty.”
Baines and Ernst Ltd