Credit card debt - consumers to get new rights

Credit card customers are to be given a whole host of new rights under a deal agreed between the government and the card industry.

Unsecured personal debt on credit cards amounts for a big chunk of the UK's debt mountain, but the new measures are expected to save households around £300 million a year.

The main changes are a ban on credit limit and interest rate rises for people in financial difficulties, and a 60-day period to challenge changes to credit card interest rates for everyone else.

Credit card companies will also be obliged to provide more information about the risks of not meeting or only making minimum payments each month.

But the government has backed away from some of the stronger demands it was facing from consumer champions.

In addition, the industry will only have to have made all the changes by the end of January 2011.

Atlantic director Vance Parsons says they welcome the initiative to pay off the most expensive credit card debt first. But he says they're concerned that "the majority of indebted consumers will not be able to pay off the debt balance in the allowed 60 days if they challenge increases in interest rates.

"Many people are only paying the minimum payments and this just about covers the accrued interest, meaning it will take decades to clear debt without an alternative debt solution."

Debt problems – payday loans

15/03/2011

Once again British consumers struggling against debt problems have been told to avoid resorting to t ...

Debt problems: Interest rate threat

14/03/2011

An increase in interest rates could plunge hundreds of thousands of households into debt problems. < ...

Debt problems: borrow to pay debts?

08/03/2011

People thinking about borrowing money in a bid to alleviate their debt problems have been told only ...

Debt problems – pay off debt

07/03/2011

People with debt problems currently considering the best ways to deal with them, might be interested ...