18 March 2009
The government has unveiled new measures to crack down on credit card companies which increase borrowing limits.
Announced by the department of Business, Enterprise and Regulatory Reform (BERR), the proposals will specifically target companies which do this without the customer's knowledge.
"We are concerned that people may be tempted to borrow irresponsibly if credit card companies increase borrowing limits without this being requested by consumers, or send out unsolicited credit card cheques," a spokesman for the BERR said.
Consumer protection is vital, the body added, assuring people that the issues were being thoroughly investigated.
The measures have, however, been met with concern by Apacs, the UK payments association, which says it is unconvinced that the legislation is needed.
Rumina Hassam, personal finance expert at uSwitch, said of the move "It is good to see that the government is working to protect consumers from being tempted to spend irresponsibly by being tougher on credit card companies. However, consumers should also be careful with their finances and manage their spending, especially in the current economic climate. If they are borrowing using credit cards, this should be approached in a disciplined way with the consumer not borrowing more than they can afford to pay back."
Earlier this month, Abbey revealed that people were unnecessarily paying £9 billion in credit card interest every year.