Related Credit Card Article

"Cap to be placed on credit card interest rates"

By Reno | May 22nd, 2010 | General

According to recent reports credit card providers could be forced to cap their interest rates as a result of new plans being looked at by the coalition government. Over recent years there has been a lot of controversy over the astonishing rates of interest that some credit card providers are charging compared to the rock bottom base rate, which has been at 0.5 percent for over a year.

The coalition government was already known to be looking into tackling a number of financial issues, including credit card rates, and officials now believe that once the plans come into force credit cards that charge an interest rate of over 25 percent could be banned from the market, which would mean a number of high interest cards disappearing.

A number of financial industry experts have said that the move by the coalition government is one that will be welcomed, but have added that this needs to be extended to look at interest rates charged on other high cost financial services and products rather than just focussing on credit cards. This includes high interest loans such as pay day loans and doorstep loans, which can charge astonishing APRs.

The report also claims that the move has taken the credit card industry by complete surprise, and if it all goes through many credit card providers could end up bring hit financially whilst others may have to scrap the cards altogether.

An official from the UK Cards Association said: “The DTI looked at a cap back in 2004 and decided there was no need for one. The devil will be in the detail. We need to speak to the Government to understand exactly what they mean.”

Tags: Credit Cards, finance, interest, interest rates, credit card

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