Reno Charlton, award-winning writer, shares her financial expertise as a contributing columnist for www.credit-card-comparison-online.co.uk and www.personal-loan-comparison-online.co.uk.
UK financial regulators and campaigners have been fighting for increased fairness from credit card firms over recent years, and more recently even the government has got involved in trying to get credit card firms to act more fairly with its customers with regards to a variety of issues, such as the charges and interest rates applied to customer accounts.
A decision was made recently to crackdown on credit card firms to try and decrease the risk of credit card debts amongst consumers, and one measure has already been put into place. Credit card firms will no longer be able to send out unsolicited credit card cheques to consumers, which are blank cheques that the consumer can write to make purchases or even to transfer money into a bank account, but which are charged at the same rate as credit card cash transactions.
However, whilst this is a measure that has already gone through there are a number of other measures that are being considered by regulators and campaigners that could cause problems for the credit card industry but could prove beneficial for consumers. This includes the credit card allocation of payments, where more expensive debt would have to be paid off first rather than being kept until last, which is currently the case and is often found on 0% balance transfer credit cards.
The measures have formed part of a white paper that was put together by the Business Secretary Lord Mandelson. He said that his measures were designed to help consumers and to ensure that they were able to make better decisions with regards to borrowing. Increases in spending limits without request from the cardholder may also be banned as part of the new measures, and a study recently revealed that many credit card customers had found that their credit limit had been increased without them asking for this to be done.
One industry official said that it was important for the government to tackle extortionate interest rate hikes from credit card firms. She said: "While this review is being carried out, we continue to see providers hike fees and charges across all credit card terms and conditions. For example, in the last year alone purchase APRs have gone up by 0.74% to 17.69%, costing consumers anything up to £288 in interest each year. If this trend were allowed to continue over the next ten years, we could be faced with average rates of 26% APR. It is these types of rate hikes which must be controlled otherwise it could lead to a downward spiral for many more people struggling with a burden of debt.".
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