 |
 |
By Reno Charlton
Staff Writer
29 December 2008
|
OVERNIGHT interest rate hikes on credit cards could now be over as the credit card industry pledges new six-month hold between rate reviews.
The growing concerns over "fair practices" and "fair treatment of customers" in the credit card industry recently led the Government to step in and hold a meeting between business secretary Lord Mandelson and the credit card companies.
At the meeting the credit card companies were sent away to prepare and implement a set of fair principles and lending practices by a set deadline - or, as Lord Mandelson threatened, the Office of Fair Trading may be bought in to investigate the practices of the credit card industry.
As the deadline grew near it was even reported in the Independent the quietness and lack of action by any credit card company.
Six-month interest rate holds
However, the credit card companies have now come forward and revealed a pledge to no longer increase interest rates on customer credit card accounts overnight, and instead, after an initial 12-month hold on new accounts, a customer's interest rate can only be changed and reviewed once every six months.
After the initial meetings the credit card companies had agreed to look at a package of measures designed to help customers and assist borrowers who were facing repayment difficulties, including an instant agreement to offer customers working with debt advice agencies on draft repayment plans a 30-day window from repayments.
The credit card companies have now spoken that they intend to also stop increasing customer interest rates on credit cards overnight, which had been a practice that concerned and angered many customers and campaigners.
Instead, the interest rate on credit cards and store cards will remain static for the first 12 months following the opening of an account, and thereon will be reviewed every 6 months. They have also said that interest rates will not be changed between the six-monthly review periods.
In addition to this credit card industry has also agreed to provide customers with at least 30 days notice when their credit card interest rate is due to change.
All this means the days of overnight rate hikes on credit cards is well and truly over - providing that is, that the credit card companies stick to their words.
Following the pledge from the credit card companies the Consumer Affairs Minister, Gareth Thomas, said: "I am pleased by the commitments card companies have made to me today. I recognise that these changes will not be without financial pain for credit card companies, but it was vital that we nipped in the bud the bad practices that were causing real hardship for borrowers. These commitments will help families manage their finances and cope with repaying their debts."
Anyone who has a good credit rating can still get a competitive credit card interest rate. If you are currently paying a high rate of interest you should compare 0% balance transfer credit cards, including to compare instant decision credit cards.
 Credit Card Comparison
Credit Card Guide
Credit Card News
| 
Credit Card Guide
