Credit card shake-up proposals
Updated on 02 July 2009
Credit card companies could be banned from raising borrowers' credit limits without their consent.
The Government has published a raft of proposals to help prevent people running up unaffordable debts.
It will consult on whether minimum monthly repayments should be increased in order to help people pay off their debts quicker.
And restrictions could also be placed on card companies increasing interest rates on existing debt.
The moves were set out in the Consumer White Paper, which aims to promote responsible lending.
The paper also contains a ban on credit card companies sending out unsolicited credit card cheques, which can be used like personal cheques, with the value of the transaction added to the borrower's card balance.
Interest charged on the cheques is usually far higher than if a credit card had been used to make the same purchase, while handling fees often of 2 per cent of the value of the transaction are also charged, and there is no interest free period.
Consumers will be given more help to make good financial decisions through a new self-help tool-kit, which will be developed by the Money Advice Trust, and a new Debtor's Guide produced by the Insolvency Service for those struggling with their borrowings.
The Financial Services Authority's website will also be updated to make it easier for people to compare the cost of different credit cards according to the way they use them.
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