New proposals have been brought in to try and provide greater protection and flexibility to credit card users in the UK, according to recent reports.
The new measures form a combination of the proposals that were put forward by the government and proposals that were put forward by lenders. The government had put forward a range of proposals originally, but the credit card industry defended some of its methods with a lengthy report to respond to those proposals.
Whilst the package of measures does not go quite as far as some industry officials may have hoped they do provide some additional protection and flexibility for credit card users.
There had been talk of the minimum repayments being increased for credit cardholders but there was concern that consumers would struggle to manage, especially if they had more than one credit card.
However, lenders will have to charge new account holders a minimum of 1 percent of the amount spent, plus enough to cover any fees, interest, and charges.
The Consumer Minister, Kevin Brennan, stated: “In our consultation it was made quite clear by consumers that they might not be able to manage their current debts if they had to pay off more each month. People with several cards would have had less flexibility to deal with their debts.”
For this reason existing cardholders with balances on their cards will continue to make the minimum repayment requested by their individual lenders.
A number of measures have been put into place as part of the proposals, which are expected to come into play at the start of next year.
This includes a ban on increasing credit limits for those with financial problems, a sixty day period for cardholders to reject any increase on their existing debts, and the opportunity for cardholders to opt out of interest rate increases.
Those that want to reject increases will have to close their accounts, but will be given reasonable time to clear the balance by their lender.
Tags: package, minimum repayments, lenders, greater protection, debt, credit cards
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lol if anything you should default on your credit cards
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Yes measures are required and are useful. But organizations who are not very close to their customers and associates commit the mistake of tracking measures that may not reflect the customers expectation/aspirations. Therefor in my view the it would be useful for organizations to bounce of relevant measures at regular intervals with their customers and suppliers to make sure they are tracking the right metrics.It works as a blindspotting process .
Someone should make an intro featuring Donny the Dart.
The UK Cards Association today (29 December) reminded the nation’s 30 million credit card holders that from the beginning of the New Year they can expect to see a number of changes that will give them greater control over their credit card accounts. The main changes for customers are: The most expensive debt on your credit card will always be paid off first. Although on average 61% of us pay off our credit card in full every month, 39% make a part payment of some kind and it is many of these customers who stand to benefit most from this change. A quarter of all credit card accounts are likely to directly benefit. The minimum repayment on all new credit card accounts will be set by the end of March so that even if you only pay the minimum your balance will always be reduced: the new calculation for minimum repayments will ensure it covers the interest, fees and charges, plus 1% of the outstanding balance. Only just over 3% of us make the minimum repayment across the year. Credit card…
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A Day in the Life of Social Media:
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I cut up my credit cards, so I won't have debt. If I don't have the cash to pay for something, I don't buy.