Credit card companies have agreed to do more to help customers who are struggling to pay their bills, as a result of the Credit Card Industry Summit that took place yesterday.
Held at the Department for Business, the Summit sought to address the Government's concerns that credit card
customers are not being treated fairly, especially during the economic downturn.
Commenting before the summit took place, Consumer Affairs Minister, Gareth Thomas said that "The Government is deeply concerned that borrowers aren't getting a fair deal. That's why we've taken swift action to bring the industry in to look at how costs are being applied to people's existing debts."
And, as a result of the summit, Secretary of State for Business, Peter Mandelson, and Minister Gareth Thomas have given the credit card industry two weeks to set a number of fair principles which will help borrowers to manage their debts.
In the meantime, the industry agreed to offer struggling customers 30 days to set up a repayment plan with a debt advisor. In addition, the credit card companies
agreed to reconsider how interest rates are applied. Commenting on the conclusions of the meeting, Louise Bond personal finance expert at uSwitch.com, said:
"We hope that today's meeting is a signal to the credit card industry that the Government means business, and that unfair tactics imposed on borrowers will no longer be tolerated."
According to figures from MoneyExpert.com, the average typical APR in November 2008 is 17.59 per cent, compared to 16.8 per cent in November 2007 when the base rate was 5.75 per cent, almost double the three per cent of today.
Commenting, director of MoneyExpert.com, Sean Gardner said: "The credit card market seems to have been operating on a different planet as far as rates are concerned for some time now and given the recession worries it's no surprise the Government has taken this step.
"There's obviously no legal code on what providers can charge and it's up to them to be competitive. Credit card rates have never been linked to the base rate even in good times.
"Hopefully though, this move will signal a more realistic approach to lending and ultimately a better deal for consumers," Mr Gardner concluded.
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