MSE News: No. 10 to reveal credit card crackdown on Monday

exel1966

karatedragon wrote: »

They should go the whole hog and ban credit cards all together. Evil things.

........to the ill disciplined and those who don't need one to scrape the ice from their windscreens on a cold winters morning, YES !

sharpdeath

It reads good but seeing as it's the banks and businesses that run this country and not the government, then nothing will ever be enforced.

CannyJock

never-in-doubt wrote: »

So going back to this, why would a CC company give you a new account if they know you're going to stooze it - won't it be the end of stoozing as we know it?

The end of stoozing has been heralded since they introduced BT fees. Every 6 months or so there's another reason for it dieing. The details tomorrow will undoubtedly be seen by some as yet another reason

On the specific point about new applications, the detailed reporting of minimum repayments and promotion flags by some providers has been running for over a year. So that information has been readily available for some time now if they wanted to look for it. But it hasn't resulted in declined applications IME.

They've always been able to refer to their internal records for those of us who've closed a card then reapplied in 6 months. But again, have never been declined on any of these repeats.

There are a two possible reasons for this.
1. Statistically stoozers are insignificant in their overall client mix so their systems aren't interested in weeding us out. At worst, we're classified as people who took advantage of a 0% marketing promotion and failed to screw it up by spending on the card, missing a payment or missing the end of the 0% promotion.
2. The financial liabilty for the credit card debt doesn't actually remain with the provider. The debt is packaged along with others and sold onto other institutions. This is where the toxic-debt expression came from, where part of the packages were US sub-prime mortgages, and then it came to light that nobody actually knew whether they'd bought into these or not. So, you need some quality in your package. And stoozers and rate tarts might not generate the same fees as revolving debt customers, but they would be viewed by anyone as a "good risk". So there's a train of thought that says that you actually want your share of this good risk debt to improve the quality of the debt you package up and sell on

jabdc5

I don't suppose there's any chance that this could be back-dated?
It would be nice if the payment from the highest interest rate rather than the lowest was back dated for say a year!:beer:

Paulgonnabedebtfree

Although generally I welcome the changes, it is with reservations. I suppose anything that makes things a bit clearer has got to be pretty much OK. I'm pleased it will probably end credit card companies trying to entice people into trapping high interest debt behind special offers as a lot of trickery is sometimes involved. Personally, I have not been caught out on this one as I understand the implications but I've had to really dig deep into sometimes quite complex T & Cs. I nearly got caught out recently until I realised that for some offers, chronological order can sometimes supercede rate of interest with some companies.
The only fly in the ointment is my Halifax card. I just do minimum payment on that by DD at the moment. I have 6.9% LOB on that one and a very slowly reducing balance of about £8.5k. Shortly after accepting the offer, they reduced my minimum payment from 2% to 1% (so currently about £85 a month). However, the interest seems to vary between anout £44 and £47 depending on the length between billing dates. So it's coming down about £40 a month. The 1% repayment is fine by me at the moment because I use the money that I don't pay them to make extra payments towards other debts that are at higher interest. I was eventually going to pay extra towards the Hali debt though it was the penultimate debt on my list (after Sainsburys which is 5.9% LOB). However, I now see that the new minimum payment is to be set at interest and charges + 1% meaning that I will need to shell out about an extra £45 a month (to cover the interest). I would rather have this money to attack my higher interest debts so in trying to protect the consumer, they have actually done me a small disservice. My total outgoings won't be any higher because I pay more than that as extra payments to my other debts.

EDIT: Just notice that 1% + charges/interest is probably only for new debts so maybe not an issue after all.

howstupid

Can you just tell me where the specifics of the announcement are? I have tried looking but can only find the headline stuff.

bengal-stripe

howstupid wrote: »

Can you just tell me where the specifics of the announcement are?

The announcement is due today (don't know the exact time). - Just wait a few more hours!

esmerellda

10:30 it seems

http://www.bis.gov.uk/news/features/2010/3/credit-cards-consultation-response

IMPORTANT BIT is http://www.bis.gov.uk/assets/biscore/corporate/docs/c/consumer-credit-store-cards-joint-commitment.pdf


PLAIN ENGLISH version of what it means - http://www.bis.gov.uk/assets/biscore/corporate/docs/c/credit-card-response-plain-english.pdf

esmerellda

This is good news for MSE users

9. In addition, we are aware of many comments on other websites and forums, including the BBC Have your Say webpage, https://www.moneysupermarket.com and https://www.Moneysavingexpert. The comments made on these external forums were similar in nature and tone to those that were made on our website and by email. Whilst the comments made on these external websites are not official responses to our consultation, they have also been considered by BIS officials, and have helped inform the Government response to the consultation. Where appropriate and relevant, some of the comments made have been quoted in this summary of responses document.

Cell

A major difference in relation to how the '60 days notice' of interest rate increases is being reported, and quite a crucial one at that between the BIS & the BBC. I should no doubt believe the BIS announcement which says

'At the moment, credit and store card companies can put up the
interest you pay on your card with only 30 days notice. Some
companies only tell you about it on your statement, where it's

easy to miss, and they only have to tell you once.
Not everyone knows what you can do when your card company
increases your interest rate.
From next year this changes. You'll get 60 days to tell them
when youʼre not happy with the increase and want to reject it.
The card company will also have to tell you that the interest rate
on your card is changing at least twice, and they'll have to tell
you how much this new interest rate will cost you as well!
If youʼre not happy, you can close your account and pay off

what's left on the card a bit at a time. You won't have to pay it
back all at once, either.'

rather than the BBC report http://news.bbc.co.uk/1/hi/business/8567677.stm

which says

A 60-day period for people to reject a change to the interest rate on their existing debt. If they reject it, they must pay off their account within that 60 days.

If it's the former it's an extension of the scheme already in place. If it's the latter then it's of little use at all as many of those in debt won't be able to pay off the account or find an alternative provider to dump the debt.