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"Credit card firms will be fairer with consumers"

By admin | January 17th, 2009 | Featured

Over the past couple of years financial regulators and watchdogs in the UK have received high levels of complaints from consumers relating to credit cards, and over recent months concerns about how fairly credit card companies are treating consumers have been brought into the limelight.

One of the major concerns that has been in the limelight is the fact that whilst the base interest rate has been plummeting over the past few months, dropping down to its lowest level in nearly sixty years at 2 percent, credit card providers have actually been increasing the interest rate on their cards.

Moreover, there has been concern over the fact that many credit card firms have been hiking up interest rates on their borrowing without giving customers warning, and these overnight hikes have left borrowers really feeling the pinch at a time when finances are already strained. In many cases the credit card firms have not been able to justify why they have hiked the rate up.

This, and a number of other concerns, has prompted senior government officials to call meetings with the credit card industry in order to thrash out a package of measures that will result in increased fairness for consumers.

Even the Prime Minister, Gordon Brown, recently became involved by speaking out about how credit card firms were fleecing customers and failing to treat them fairly. He stated recently that credit card firms needed to ensure that they acted fairly when it came to their borrowers, and following his intervention meetings were arrange between the credit card industry and the Business Secretary Lord Mandelson, as well as Consumer Affairs Minister, Gareth Thomas.

As a result of these meetings credit card firms have agreed to a number of measures that are designed to make things easier for consumers. First of all they have agreed to hold off debt collection proceedings for sixty days if a borrower falls behind with repayment providing the borrower is working with a debt collection professional in order to come to some sort of agreement with regards to their debt.

Another major change that credit cards companies have agreed to make to their operating procedures is to stop hiking up interest rates overnight on customers credit cards accounts, which is something that has become a real concern amongst consumers and campaigners recently, especially in the current financial climate.

Credit card firms will now wait at least twelve months after opening an account before increasing the rate and then will raise the rate no more than once every six months. Consumers will also be given at least thirty days notice of any interest rate increase. All of these measures are designed to help consumers to prepare for any rate increases and to be able to budget for any repayment rises at a time when money may already be very tight.

Read more on whether you should ask for an credit card interest rate cut.

Tags: credit card firms, credit card charges

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