It's been a long time coming but Gordon Brown has announced today that a crackdown on credit and store card rates could save consumers in the region of £300 million a year. The move means that monthly repayments must be used to pay off those debts borrowed at the most expensive rates and a ban on credit limit and interest rate hikes could also be in the pipeline.
Top related searches:
At present, borrowers paying only part of their monthly bill can find that they are making slow headway since card firms reduce the debts with the lowest interest rates first. That means that those high interest purchases or, even worse, cash withdrawal interest rates are still to be paid and the interest is mounting all the time. It is estimated that these practices currently cost the average borrower £1,500.
But under the new initiative credit and store card firms will be forced to ditch these unfair and often confusing rules and regulations or face the possibility of having their licences revoked. It is hoped that, in conjunction with consumer groups and debt advice agencies, at risk borrowers will thereby be protected from those all too tempting credit limit increases and interest rate rises.
PricewaterhouseCoopers partner Richard Thompson welcomed the plans. He told the Daily Mail: "The proposals will provide consumers with a greater level of transparency and control which will allow them to make more informed decisions as to their borrowings."
But in the wake of a global economic downturn largely blamed on lending to those who can ill afford to repay, is this just too little too late?