Credit and Store cards
Following a review of the sector the industry has agreed to give consumers five new rights which will give them more control over the way in which they can choose and use their credit and store cards.
The five new rights are:
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Right to repay: consumers’ repayments will always be put against the highest rate debt first. For consumers opening new accounts the minimum payment will always cover at least interest, fees and charges, plus 1% of the principal to encourage better repayment practice
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Right to control: consumers will have the right to choose not to receive credit limit increases in future and the right to reduce their limit at any time; and consumers will have better automated payment options. Consumers will be able to do both of these online
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Right to reject: consumers will be given more time to reject increases in their interest rate or their credit limit
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Right to information: consumers at risk of financial difficulties will be given guidance on the consequences of paying back too little; and all consumers will be given clear information on increases in their interest rate or their credit limit including the right to reject
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Right to compare: consumers will have an annual statement that allows for easy cost comparison with other providers.
In addition, consumers who are at risk of financial difficulties will be protected through a ban on increases in their credit limit as well as the ban on increases in their interest rate, and card companies will work with debt advice agencies to agree new ways they will provide targeted support to consumers at risk to help improve their situation before they are in too deep. These new rights, together with the existing right to redress, mean a better deal for consumers, giving them improved control of their credit and store card borrowing.
The key consumer benefits arising from these five new rights will come into effect by the end of the year. This means that consumers will not have to wait for legislation to be passed to benefit from these measures.
To see all the documents relating to the review, including the consultation document, the Government's response to consultation and the plain English versions, please go to: Review of the Regulation of Credit and Store Cards
