Credit cards as well as store card's interest rates are being reviewed by the government while taking measures so the rates charged are fair. The government is in discussion with the regulator to see if there can be a set limit on interest rates in order to lessen the burden for those who find it difficult to pay them.
The review also covers the high bank charges as well as personal insolvencies. The proposed changes will be published the coming year.
The Department for Business as well as the treasury wishes to help people with the borrowing as well as lend a helping hand to those in trouble.The reviews with regard to consumer borrowing would include issues such as:
- How to deal with bank charges that are unfair?
- Allowing people to return their store cards without charges after giving them a 7-day period to do so.
- If it is possible to empower the regulator in order to cap the high rate of interest being charged on store as well as credit cards.
- Detailed statements (generated electronically) by the card issuers in order to enable customers to take a decision and switch to a card that offers a better deal.
Protecting the interests of the card issuers as well as the vulnerable consumers, Ed Davey, Consumer Minister, was quoted as saying that he wishes to encourage both the customers as well as the issuers to make responsible decisions and help in strengthening the protection wherever it was necessary. He also wishes to examine how personal insolvencies could be tackled in order to make things work better, as people are confused with the innumerable debt solutions that are being offered when they are in trouble.
In the past few years alone, wherever people were unable to clear off payments that were due on their cards, banks have stepped in and helped waive off about 10% of the payments that were due on their cards. These have caused the bank losses and have also inflated credit card costs in spite of the bank rates being low. In the month of June, recommendations were withdrawn by the Office of Fair Trading with regard to cap on interest rates. Borrowings such as payday loan, pawn broking, as well as home credit, all of which are short-term loans would see no caps on interest rates. The office felt that it would be unfair as well as complex to impose any form of formal price tabs, as it would harm the interests of borrowers as these loans were normally availed by the vulnerable lot who could not avail a loan elsewhere.