Credit card holders will be offered greater protection from spiralling debts, although the changes are watered down from original proposals. Consumers will be given 60 days to reject changes in the interest rates charged on their existing debts.
They will also be able to opt out of any increases in their credit limit.
The agreement comes after the credit card industry met the government's original proposals with a strident 230-page defence of its methods
The government told the credit card industry that it had to "clean up its act", but the group representing lenders came up with its own proposals for helping customers.
The new agreement is a merger of the two, with the changes coming into force by the end of January 2011 at the latest.
They include:
- Ensuring that the highest cost debt on a credit card is paid off first
- A new 30-day window to allow people to opt out of any unsolicited increase in their credit limit
- A ban on those in financial difficulties being offered an unsolicited rise in their credit limit
- A 60-day period for people to reject a change to the interest rate on their existing debt. If they reject it, they must pay off their account within that 60 days.
- Regular payments of only the minimum being met with more information from the lender.
(source BBC)
