Credit card rights will not be free

Credit card users may be expecting their costs to fall as a result of the agreement between the government and the card industry on new rights, but their hopes could be dashed.

With the industry claiming that the scheme – due to come into force by the end of January next year – will cost it half a billion pounds, many commentators are on the look-out for new charges.

The Daily Mail's personal finance editor Jeff Prestidge claims that interest rates charged on card borrowing are almost certainly going to rise as a result.

Plus, he warns, that will probably happen long before the new rights come into effect.

Director of Atlantic Vance Parsons says, "People with credit card debts really cannot afford for interest rates to go up any more on their debt balances, which we have seen throughout the recession".

So while financial problems caused by the less transparent charges should fall, the basic cost of building up personal debt on a credit card is likely to go up.

Vance Parsons goes onto say that, "As with many of the heralded government initiatives to provide more consumer protection, they generally do not anticipate the lender reaction which is likely to cause more consumer detriment in the short-term and medium-term.

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 ...