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"The controversy over credit cards heightens"

By admin | December 21st, 2008 | Featured

Over recent months there has been increasing controversy in relation to credit card providers in the UK, but over the past couple of months this has really heated up, with many accusing credit card companies of fleecing their customers. One of those making this accusation is no other than the Prime Minister himself, Gordon Brown, who has expressed his dissatisfaction at credit card firms and the way in which they are treating their customers at a time that is so financially challenging.

The thing that seems to have everyone up in arms at the moment is the fact that whilst the Bank of England has lowered the base interest rate by nearly 2% in total over the past two months alone, the actual rate of interest and charges on many credit cards has been rocketing. With many people already struggling financially the government was hoping that a cut in the base rate would result in cuts in borrowing rates, which would ultimately ease the financial situation for consumers and would result in increased spending and boost the economy. However, it seems that many of the credit card firms are simply not prepared to play ball.

Gordon Brown has demanded that credit card firms treat customers more fairly, and that they stop ripping customers off with regards to charges, fees, and interest rates. Many different fees, charges, and rates are said to have gone up recently, and this includes headline purchase interest rates, balance transfer fees, foreign charges, and cash withdrawal fees and interest, all of which add up to a tidy profit for the credit card firms and a decidedly empty wallet for the customer.

It is not just the hikes and increases that are affecting consumers when it comes to credit card spending, particularly given that so many consumers have become more and more reliant on credit cards over recent months since living costs and other costs have gone up whilst lending has dried up. The availability of credit cards has also dwindled, and this means that many people are unable to switch to a better deal in order to save themselves some money and interest on their credit card debt.

One thing that consumers do need to bear in mind is that if they are turned down for a cheaper credit card you should avoid applying again straight away, and should wait a few months before you apply for another card, as otherwise your credit rating will take a real hit.

One industry official said: ‘If you are declined a new card, the worst thing you can do is start desperately searching around and applying to lots of different providers. Every time you apply for a card it leaves a footprint on your credit file. If you have lots of footprints in a short time, this can act as a warning sign to lenders that someone has troubles. The best thing is keep making prompt payments on all your debts so you keep your credit record clean. Pay off as much debt as you can, and then wait. As long as you haven’t had more than two or three refusals in the past two months it is probably OK to apply again in three to six months.’

Tags: Bank of england, Credit Cards

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