Government cracks down on credit card debt
The government is looking at ways to crackdown on the credit card industry in a bid to reduce the temptation to get into debt.
With the current outstanding balance owed on credit cards in Britain being £53bn the Government has decided it now time to do something about it.
They are planning to introduce legislation that will ban credit card companies from raising the credit limit of a customer unless they specifically request it and to stop firms sending out unsolicited credit card cheques.
Gareth Thomas, Consumer Affairs Minister said: "It's vital we protect consumers at this time and we are exploring these issues carefully".
What are unsolicited credit card cheques?
These cheques are often classed as a marketing gimmick and usually sent to customers without their prior approval inviting them to use the cheques to purchase goods and services or use to make payments.
What most people were not aware of is that by using the cheques they would incur higher charges on their account compared to using the credit card and that any items brought using the cheques did not have the same protection against goods being faulty.
In December 2006 as a result of the new code of practice within the banking industry, the credit card companies agreed to "assess a customer's suitability before sending credit card cheques" as well as giving clear information on the cost of using them.
UK Payment Association, Apacs said only 7% of the cheques sent out are normally used and also points out that they use the customer's existing credit limit rather than increasing it.