CREDIT CARDS
New Credit Card Regulations for Credit and Store Cards
The UK Cards Association has made a joint commitment with the Government to ensure customers’ interests are met with credit and store cards.
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As a result of consultations between the Association and the Department for Business, Innovation & Skills (BIS), the Review of the Regulation has outlined a range of commitments including measures to help customers manage their finances.
These include ensuring lenders enable the borrower to pay off the highest cost of debt first, and prevention of customers facing difficulty being offered a credit increase.
This last measure was based on the data from the Association which showed of the 58 million credit card accounts in the UK in 2009 - about eight percent had received a credit limit increase.
“We are pleased that our evidence on unsolicited credit limit increases and the re-pricing of existing debt has conclusively shown that existing practices do not need to be overhauled,” said Melanie Johnson, The UK Cards Association chair.
“We believe that, overall, the outcomes of the review are balanced and will give consumers the greater control and convenience that the industry and the Government wish to provide.”
Further measures include making it compulsory for lenders to contact a customer who repeatedly only makes the minimum repayment to make it clear it will be harder to repay in the long term.
This commitment was based on research which showed about three percent of customers pay the minimum for 12 consecutive months.
The Association’s data recently showed in 2009 there were 30.3 million credit card holders holding 58 million credit cards in the UK which showed people are moving away from multiple cardholding. In 2008 30.2 million adults held 66 million credit cards.
The research also looked positively on the increasing number of people who pay their credit card bills off every month in full, up in 2009 to 61 percent from 55 percent in 2007.
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