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"Ultimatum given to credit card companies"

By admin | December 29th, 2008 | Credit Cards

Credit card issuers have recently been given an ultimatum by the government with regards to the charges, fees, and interest rates that they are charging consumers. Government officials have said that credit card firms need to take action and make things fairer for borrowers otherwise they will have to intervene to ensure that this gets done. The credit card companies were given a deadline by which time they needed to ensure that measures had been put into place to comply with the government’s wishes.

Meetings have recently taken place between credit card industry officials and the Business Secretary Lord Mandelson, and this came about after the Prime Minister Gordon Brown expressed concern about the way that credit card firms were fleecing consumers, and about the crippling rates of interest that were being charged on credit cards even though the base interest rate had plummeted over recent months.

However, one industry official said: ‘The agreement between the Treasury and credit card companies looks like a classic summit communiqué – which says a lot and means nothing. For example there is no commitment on the ‘order of payments’ issue which sees most card companies apply payments to customers’ cheapest debts first. And a one month window isn’t enough time for struggling borrowers to reach agreements with all of their creditors, three months would have been better, along with a commitment not to apply for a Charging Order to take possession of borrowers’ homes.’

He added: ‘What’s more, a likely result of what the Treasury has achieved is that it will get harder for people who want to take out a new credit card to be accepted. The Government needs to understand that it can’t control both the supply of credit and the price.’

Tags: credit card companies

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