BIS unveils major credit card proposals
By UK CreditCards.com
The Department for Business, Innovation and Skills (BIS) has unveiled new plans to reform the UK credit card sector.
Restrictions on APR increases for customers with existing debts and bigger mandatory monthly repayments could both result from the adoption of the proposals. BIS said that the "order of payments" imposed by credit card providers could also change. This would see payments made by customers prioritised towards existing high-interest debts held on card balances. Currently, firms can pay off lower-interest debts first, meaning that the cardholder has more debt to repay over the long-term.
The BIS plans are now out for consultation, meaning that no concrete changes will be imposed immediately.
Responding to the news, The UK Cards Association said that it would be "reviewing the evidence" of the possible future impact of the changes.
"These proposals risk disadvantaging more customers than they protect," the group's chair Melanie Johnson said. However, the plans were welcomed by Consumer Focus, a customer advocacy group.
Spokeswoman Linda Weatherhead commented: "When every penny counts, these proposals are a very welcome step towards helping consumers get a fair deal."
Published: 29 October 2009
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