Grasping credit card companies are to face tough new laws to stop them luring customers further into debt.
The crackdown will stop card firms raising credit limits without telling the customer – and there will also be a ban on them sending out unsolicited cheques.
Britons owe £53billion on cards and there are fears the problem will get worse if people use them to get through the recession. Consumer Affairs Minister Gareth Thomas said: “We’re concerned people may be tempted to borrow irresponsibly if card companies increase borrowing limits without this being requested by customers, or send out unsolicited cheques.”
The new laws are expected to be introduced in the forthcoming Banking Bill.
They will make it obligatory for companies to consult with customers before raising their credit limit and to run a check which should ensure they can afford going further into debt.
Peter Vicary-Smith of Which? said: “Stamping out these toxic credit practices is a clear victory for consumers.”
But Peter Harrison, of moneysupermarket.com, said: “If the Government wanted to make a substantial difference to lending practices, it would insist payments made by people were assigned to highest interest debt first and people weren’t allowed to exceed their credit limit.”
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