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Credit card terms 'to be curbed'
Consumer Minister Kevin Brennan: '40 years' to pay off your credit card
Some unfair credit card terms are to be outlawed under proposals being put forward by the government.
It wants to stop card firms raising interest rates on existing debts and to prevent them raising someone's spending limit without authority.
Monthly repayments must be used to pay off the most expensive debts first, and the size of minimum repayments will be raised to ensure faster debt repayment.
The body representing UK card issuers said it would study the proposals.
"Today signifies the start of the government's consultation exercise," said a spokeswoman for The UK Cards Association.
"We look forward to widely publishing our own response to the many ideas put forward.
"We will continue to support change where there is evidence to show that it is in the best interests of consumers. We expect the government to do the same."
'Exploited'
The government said that credit and store companies had to "clean up their act."
Have Your Say Darren, Dartford
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Consumer Minister Kevin Brennan said: "My view is clear, the current relationship between card companies and consumers cannot go unchallenged. It is simply not fair.
"It is not acceptable for card companies to impose complex and confusing terms and conditions that can leave people baffled, or to increase interest rates without proper explanation.
"Consumers should not feel each month as if they have been exploited or disadvantaged," he added.
The latest proposals, which are now being put out to consultation, by the Department for Business Innovation and Skills (BIS) include:
• changing the order of priority for credit card repayments, so that the most expensive debts, such as cash advances, are paid off first
• increasing the minimum amount that must be paid off each month to accelerate the overall rate of repayment
• banning the practice of raising borrowers' credit limits without their prior consent
• restricting or banning increases in interest rates on debts already incurred.
The Nationwide building society welcomed the BIS proposals.
"We are delighted that BIS have included order of payments in the review," said Nationwide director Chris Rhodes.
"The US has already recognised that the practice of paying the cheapest debt first is unfair to customers and is forcing lenders to be more consumer friendly."
'Fair principles'
The government's latest plans follow other limits on credit card practices brought in earlier this year.
These ideas came after a government-organised "credit card summit" in November last year, at which card companies agreed to a set of "fair principles".
Among other things, they agreed to stop raising interest rates when a customer fell behind with their repayments.
The government also pledged to ban the issuance of unsolicited credit card cheques and legislation to do this is now going through Parliament.
Consumer Minister Kevin Brennan: '40 years' to pay off your credit card
Some unfair credit card terms are to be outlawed under proposals being put forward by the government.
It wants to stop card firms raising interest rates on existing debts and to prevent them raising someone's spending limit without authority.
Monthly repayments must be used to pay off the most expensive debts first, and the size of minimum repayments will be raised to ensure faster debt repayment.
The body representing UK card issuers said it would study the proposals.
"Today signifies the start of the government's consultation exercise," said a spokeswoman for The UK Cards Association.
"We look forward to widely publishing our own response to the many ideas put forward.
"We will continue to support change where there is evidence to show that it is in the best interests of consumers. We expect the government to do the same."
'Exploited'
The government said that credit and store companies had to "clean up their act."
Have Your Say Darren, Dartford
Read your comments
Consumer Minister Kevin Brennan said: "My view is clear, the current relationship between card companies and consumers cannot go unchallenged. It is simply not fair.
"It is not acceptable for card companies to impose complex and confusing terms and conditions that can leave people baffled, or to increase interest rates without proper explanation.
"Consumers should not feel each month as if they have been exploited or disadvantaged," he added.
The latest proposals, which are now being put out to consultation, by the Department for Business Innovation and Skills (BIS) include:
• changing the order of priority for credit card repayments, so that the most expensive debts, such as cash advances, are paid off first
• increasing the minimum amount that must be paid off each month to accelerate the overall rate of repayment
• banning the practice of raising borrowers' credit limits without their prior consent
• restricting or banning increases in interest rates on debts already incurred.
The Nationwide building society welcomed the BIS proposals.
"We are delighted that BIS have included order of payments in the review," said Nationwide director Chris Rhodes.
"The US has already recognised that the practice of paying the cheapest debt first is unfair to customers and is forcing lenders to be more consumer friendly."
'Fair principles'
The government's latest plans follow other limits on credit card practices brought in earlier this year.
These ideas came after a government-organised "credit card summit" in November last year, at which card companies agreed to a set of "fair principles".
Among other things, they agreed to stop raising interest rates when a customer fell behind with their repayments.
The government also pledged to ban the issuance of unsolicited credit card cheques and legislation to do this is now going through Parliament.
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