The lovemoney.com charter for credit card justice

by Ed Bowsher on 21 June 2009  |  6 comments
Tweet

The credit card industry needs radical reform. I've written a charter for credit card justice.

The US Congress has passed a credit-card 'bill of rights' which will make it much harder for the credit card companies to exploit their customers.

Barack Obama was strongly behind the bill. He pushed American politicians to support the measure and he also summoned credit card bosses to the White House for a dressing-down in April.

We think Britain should follow Obama's lead. lovemoney.com has compiled a 'Credit Card Charter' which would radically reform the UK's credit card industry if enforced.

In an ideal world, the banks would voluntarily introduce these measures. Sadly, that's an unlikely scenario, so the government and parliament will have to force the credit card companies to play fair.

Here is our charter:

The lovemoney.com charter for credit card justice

1.       The interest rates charged on many credit cards are way too high. Credit card APRs should be capped at Base Rate plus 10%.

2.       Negative payment hierarchy should be banned. Credit card providers should allocate all monthly repayments to the most expensive debt first.

3.       Penalty charges for late payment of a credit card bill should be no more than £5 per late payment.

4.       Special promotional deals - such as a 0% balance transfer - can't be withdrawn after one late payment. Promotional deals may only be withdrawn when the user breaks the rules a second time.

5.       Charges for cash withdrawals at ATMs should be limited to £1 per transaction. Interest on cash withdrawals should be charged at the same rate as purchases for that card.

6.       A credit card customer must be obliged to pay at least 5% of his/her outstanding credit card debt each month. Low minimum payment levels can consign some users to more than a decade of debt.

7.       Credit card companies can no longer increase credit limits without permission from the customer.*

8.       Unsolicited credit card cheques should be banned.* 

* The government said in March that it would introduce legislation to deal with points 7) and 8). We welcome that announcement but we'll carry on campaigning until any such law is passed.

Compare credit cards with lovemoney.com