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"Credit card cheques banned by government"

By admin | July 28th, 2009 | Credit Cards

In an ongoing bid to cut down on controversial credit card issues the government has recently brought in regulations that ban the sending out of unsolicited credit card cheques.

The cheques have been sent out to credit card customers without them asking for them by many credit card firms, who encourage the cardholders to use the cheques to make purchases or even to put money from their credit cards into their bank or savings accounts. However, the money used on these cheques is charged at the same rate of interest as when being taken out on a card.

This move comes as part of a wider crackdown on credit card providers, which could ultimately result in them losing revenue. One of the issues that has always caused controversy relating to credit cards is the fact that most use the monthly repayments made by customers to repay the cheapest debt first, leaving the more expensive debt to continue accruing interest. However, this is something else that might change as a result of the crackdown.

The new proposals were formed as part of a white paper put forward by the business secretary Lord Mandelson, who has expressed concerns over how many vulnerable people may end up suffering because of the cost of credit card borrowing. Other changes could include lenders being prevented from increasing the interest rates for existing cardholders and minimum repayment levels being increased to ensure that debts are repaid more quickly.

Concerns have also been raised over credit card providers encouraging people to get into debt, with many increasing limits without any request from the cardholder. A recent survey found that 20 percent of cardholders had seen their credit limits increased without asking for this to be done.

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Post A Comment:

  1. The government cannot be criticized for banning credit card cheques as the way the credit card providers handle money used through these cheques affects the customers considerably.

    Comment by Gordon's Credit Report — July 29, 2009 @ 6:10 pm

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