MSE News: Govt credit card crackdown – MSE submission: Editorial comment
Former_MSE_Natasha
Posts: 672 Forumite
This is the discussion thread for the following MSE News Story:
"Credit card stealth charges have been damaging consumers for years. Yet now the Government's given an opportunity for change, and MoneySavingExpert.com has published its reply to the consultation..."
"Credit card stealth charges have been damaging consumers for years. Yet now the Government's given an opportunity for change, and MoneySavingExpert.com has published its reply to the consultation..."
Read the full stories on this issue:
Govt credit card crackdown – MSE submission
Govt credit card crackdown – MSE submission
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Comments
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Excellent well done MSE.
I hope lots of site users have also contributed individually - its not often you get to input directly into something that affects us all so much - so if you havent yet go to the BIS site and have YOUR say too !LegalBeagles0 -
I would be for minimum payment hikes, but only on new agreements! I agree totally to do it on existing cards will end up with people having defaults as they budgeted for the current minimum payments based on there current commitments.
I love the idea of stating the time it takes to pay off, and interest earned. A nudge is all some people need.
I am a very anti-credit person except for mortgages, but everyone manages there finances differently.Although no trees were harmed during the creation of this post, a large number of electrons were greatly inconvenienced.
There are two ways of constructing a software design: One way is to make it so simple that there are obviously no deficiencies, and the other way is to make it so complicated that there are no obvious deficiencies0 -
It appears there are still some cards where minimum payments do not even cover the interest charged.
Here's an example.
http://forums.moneysavingexpert.com/showthread.html?t=2214663
I'm not sure supporting such practise that allows borrowers to get into ever spiralling debts is for their best."Now to trolling as a concept. .... Personally, I've always found it a little sad that people choose to spend such a large proportion of their lives in this way but they do, and we have to deal with it." - MSE Forum Manager 6th July 20100 -
A blanket ban on increasing min repayment is not the right step forward - a low minimum repayment give a false sense of level of debt a person is in. However, consideration should be given to existing borrowers.
A similar strategy to the option of freezing the interest rate and closing the card on clearing the balance if the consumer is unwilling to accept an increased interest rate can be used.
Minimum repayment percentage for existing borrowers should be raised to minimum of 10-20% of the balance and customers unwilling to accept the new min repayment rate, should be given the option to freeze the min repayment rate they are presently on and then close the account once the balance has been paid off. For all new agreements, higher min payments should be compulsory. Amex already has 10% min repayment rate - this should be an example for others.0 -
It appears there are still some cards where minimum payments do not even cover the interest charged.
Here's an example.
http://forums.moneysavingexpert.com/showthread.html?t=2214663
I'm not sure supporting such practise that allows borrowers to get into ever spiralling debts is for their best.
precisely
from the article:
"new 'recommended repayment level' to clear debt within 3 years"
credit cards should be short-term debt, not medium to long-term
ideally the debt should be cleared within 12-24 months
if that means minimum repayments have to go up, they go up.
i really cannot see what the problem is with that
"Allocation of repayments must be proportionate"
what if the interest charges on the different types of debt on the card had to all be the same?
& all the charging had to start at the same point in time?
then it wouldnt matter what was getting paid down first, as it would all be costing the same.0 -
"new 'recommended repayment level' to clear debt within 3 years"
credit cards should be short-term debt, not medium to long-term
ideally the debt should be cleared within 12-24 months
if that means minimum repayments have to go up, they go up.
i really cannot see what the problem is with that
For those with low APR LOB deals or on 0% promotions, increased mandatory minimum repayments makes affordability a problem. Some of the best and worst cards are from the MBNA stable.
Good points: Long 0% promotions, low 1% minimum repayments, reasonably generous credit limits, ability to transfer credit limits between products
Bad points: 1% min repayment doesn't include interest, APR hikes prior to end of 0% promotion, marketing aimed at promoting spending
Low minimum payments should still be available to help with affordability. The article's option of recommended payments would be an extra option from my reading."A child of five could understand this. Fetch me a child of five." - Groucho Marx0 -
Low minimum payments should still be available to help with affordability. The article's option of recommended payments would be an extra option from my reading.
Thats correct in our submission we recommend and enforced menu of repayment options each explained in real terms so people can see the impact they'd be
The Min Repay
The Recommended Repay
Fixed Value Repay (e.g. £200 - or the min whichevers higher)
Repay in fullMartin Lewis, Money Saving Expert.
Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.Don't miss out on urgent MoneySaving, get my weekly e-mail at www.moneysavingexpert.com/tips.Debt-Free Wannabee Official Nerd Club: (Honorary) Members number 0000 -
The promise of new rules is already bringing the greedy banks out
with increases ahead of them. Halifax letter today 5% increase no offer of options to close and repay at old rate etc.0 -
georgeshepherd wrote: »The promise of new rules is already bringing the greedy banks out
with increases ahead of them. Halifax letter today 5% increase no offer of options to close and repay at old rate etc.
Doesn't matter if they don't openly offer it, if you call them within 30 days of the letter requesting it they have to comply by law.Cashback Earned ¦ Nectar Points £68 ¦ Natoinwide Select £62 ¦ Aqua Reward £100 ¦ Amex Platinum £48
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MSE_Martin wrote: »Thats correct in our submission we recommend and enforced menu of repayment options each explained in real terms so people can see the impact they'd be
The Min Repay
The Recommended Repay
Fixed Value Repay (e.g. £200 - or the min whichevers higher)
Repay in full
its all very well 'showing' people what impacts different payments would have, but what if the low minimum payment isnt a good thing to be doing in the first place?0
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