By Andrew Grice
November 12 2008
Gordon Brown ordered a crackdown on credit and debit card rises yesterday after The Independent revealed that banks had raised rates even though borrowing costs had fallen.
The Government has called a summit with the credit card industry, which will be held soon, at which ministers will ask lenders to draw up a new “statement of best practice” to protect their customers. If the statement is not tough enough, ministers might ask the Office of Fair Trading to take action against individual firms. Ministers want to ensure the 1.5 per cent base rate cut announced by the Bank of England last week is reflected in interest rates on credit cards. They also want companies to stop using small print in contracts to raise rates suddenly and to give more support to people who run into problems.
The Government wants a pledge for “clear and fair principles” to apply to the costs people face on existing debts and that only “responsible lending” will be entered into in future.
The Prime Minister intervened after research for The Independent showed that while the base rate had fallen from 5 to 3 per cent since May, the average annual percentage rate for credit cards had increased from 17.2 to 17.6 per cent, and on store cards to 25 per cent. Mr Brown told a Downing Street press conference: “We have got to bring the credit card industry in, talk to them, so they join with us in enabling clearer principles to apply to the costs people face.” His spokesman said Mr Brown was “very concerned” about the behaviour of some credit card companies.
Ministers are expected to reject a cap on interest charges. Gareth Thomas, Consumer Affairs minister, said: “Interest rates are going down and we want people to benefit from those interest rate reductions.” Latest figures showed spending was lower and repayments higher than three years ago.
Well The ones in the US are worse then those from the UK much worse and they have been uping the interest to as high as 32%. Hy way robbery theirs are.
Banks Ripping off Credit Card Customers
Well the higher the interest the more in debt people get and the more bankruptcies there will be.
Being greedy is self deductive.
Lets face it banks haven’t been exactly to bright these days.