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

howstupid

^^ I saw that on the BBC website too. You are right- if that is the change it has no benefit to those card holders who cannot pay the balance within the 60 days.

Here's hoping the BBC have got it wrong!

DGJsaver

Exaclty what i just read !! lets hope it gets clarified , because as it stands if thats true , it will screw thousands and thousands of people who are being rate jacked on balances of ££££££

Cell

The full BIS report is, thankfully, quite clear. I think it's the BBC who have somehow misinterpreted:)

We have therefore agreed with credit and store card companies
that consumers will now have 60 days to tell their card company they
want to reject an interest rate increase, close the account, and pay down the

outstanding balance at the existing rate over a reasonable period.

DGJsaver

who decides the `reasonable period`

??

The Banks !!??!

DGJsaver

because most people up to their necks in pay the minimum amount and on a balance of say 4k...thats going to take years and years...

Cell

As ever there is a lot of devil in the detail. For example the report says:

Lenders have also committed that they will not increase interest rates at all for consumers at risk of financial difficulties. They will work with debt advice agencies to agree how they will identify those ‘at risk’. These rights will apply to any interest rate increase which is not directly linked to a change in an external reference rate such as the base rate or the inter-banking lending rate (LIBOR), and not just to individual risk-based
re-pricing.

Now that opens a major can of worms. If I'm being re-priced because the risk of me defaulting has increased (ie I have a lot of debt/high borrowings/up to my limits etc) then by definition I've been adjudged to be at risk of financial difficulty, or at least a higher risk.

So they've committed to not increase the rates of the very people they've identified as 'at risk' and for whom, therefore, they want to increase the price of credit due to that risk. Spot the contradiction!

Cell

DGJsaver wrote: »

who decides the `reasonable period`

??

The Banks !!??!

I think that's essentially just a re-statement of the current position. If you've been making minimum payments or just above routinely then that will be taken as the 'reasonable' figure. Certainly that's the case on the two I've shut down.

Cell

The BBC report has now been changed:D.

A 60-day period for people to reject a change to the interest rate on their existing debt. If they reject it, they must then close their account, with "reasonable" time being given for them to pay off their debt or move it to another lender.

DGJsaver

surley `reasonable time` is now worse than before , when it was assumed that as long as you kept up the same sort of repayments as your history suggest.....now , whats to stop the bank saying right , not having this , pay more or face the consquences....? after a year or so ?

Cell

ILW wrote: »

Anyone who is forced to keep on spending and adding to their CC debt is just getting into more trouble and needs to address other things in their life.

I can see what you mean, but realisation comes at different times and in different ways.

I realised about two years ago what I'd been doing and vowed to put it right as quickly as I could. However as many people who post in here testify it's a slow old process unless you come into some money or increase your income significantly.

Sometimes that involves using the credit you have carefully while paying off the most expensive debt. If everything had been left more or less as it was then I would be in a position in a years time when a couple of loans would have been paid off and I'd be able to really hit the CCs. But what's happened is that because of rate jacking, reductions in limits etc etc that planning has been threatened. I would say 2/3rds of my progress has been lost due to rate jacking.

I WILL pay my debts off without going into an IVA or bankruptcy. I don't ask for sympathy for getting myself here, but getting out is a long term project which can be knocked back simply by a decision to add 5% onto an APR.

I have cancelled two such agreements, but I can't cancel them all because without some flexibility to balance day to day expenditure via a credit card my income alone won't enable me to achieve my aim.

Egg have just added £50 a month to my monthly bills, the second increase in a year. Straight out of the budget. It's the one card that I need to keep open and I can't close it down because it's my 'funder of last resort'.

I know that my habits needed to change, but it takes time, with a fixed income, to implement these changes.

Sort of off topic, I guess, but I saw your comment and wanted to respond.

I would also ask whether the 0% deals have been subsidised by those paying interest to date? If so then if indeed the new provisions do slightly restrict the availability of 'deals' then surely it's simply a shift back towards the status quo rather than being a prejudicial restriction on the 0%ers and stoozers?