How do the new rights for credit card holders affect you?

If you’re one of the 30 million people in the UK who own a credit card, you’re likely to be affected by the government’s new review of the regulations surrounding credit cards and store cards.

Last week the Department for Business Innovation and Skills met with leaders from the credit card industry to discuss responsible lending and find new ways for credit and store cards to help consumers manage their debt.

The changes should come into force by the end of January 2011.

The way credit card regulations affect consumers is still high up on the government agenda after the credit card industry were told to 'clean up their act' last year.

These are some of the ways the review directly affects consumers:

1. Interest rates: You will have 60 days to reject changes in the interest rate charged on your credit card. If you reject them, you must then close your account, allowing 'reasonable' time to pay off your debt or move it.

2. Credit limits: You can opt out of increases to you credit limit within 30 days and you will have the right to reduce your limit at any time; there will also be better automated payment options. You'll be able to do both of these online.

Our research last year showed that a staggering six million* consumers received a boost to their credit card limit without their consent.

3. Minimum repayments: There's a new rule that monthly minimum repayments should at least cover interest, fees and charges, plus 1% of the amount spent. You'll also be given more information on the consequences of only making the minimum repayments.

4. Order of payment: From now on, rules surrounding the order of payment will mean that your repayments will have to go towards paying off your most expensive debts first.

5. Cost comparison: You'll get an annual statement that allows you to make easy cost comparisons with other providers.

6. If you're at risk of financial difficulties: You'll be given guidance on the consequences of paying back too little, and you also won't be offered an increase in your credit limit.

Credit card companies will also be working with debt advice agencies to agree new ways they will provide targeted support to consumers

Rumina Hassam, uSwitch personal finance expert says "This overhaul puts consumers back into the driving seat when it comes to managing their debt and should be welcomed.

"Not only will the proposals give consumers more power over their finances but they are likely save millions in unmanageable debt repayments."