Credit card companies are now paying off customers most expensive debts before cheaper credit card debts are repaid.
The new regime which began at the start of the year is intended to help people repay their credit card debts as quickly as possible.
Credit card companies will also now give 60 days’ notice (previously 30 days) of any interest rate increase on customer’s credit card accounts. Customers will have the right to reject any interest rate increase on their account. In this situation customers will have to give back their credit cards and then continue to repay the outstanding balance until it is cleared.
Craig Gedey Marketing Manager at Debt Advisory Line said: “These new rules obviously give credit card customers more protection against rising credit card debts because they will now always be paying off the most expensive aspects of their debt first.”
“Until now many credit card customers who pay back a relatively small percentage of their balances every month will have seen only the cheapest debts paid off; for example where a 0 per cent interest rate has been offered as an introductory benefit. This allows the credit card companies to continue charging interest on other debts such as new purchases made outside of the 0 per cent interest rate offer.”
“Anyone who is simply unable to afford their unsecured debt repayments after monthly living expenses should speak to a professional debt management company.”
“At Debt Advisory Line, on average, we reduce our customers debt repayments by 50% – visit our web site www.debtadvisoryline.co.uk or call us on 0800 157 7254 for more details.”
Credit card customers will also be sent annual statements showing how much they have spent, how much they have repaid and how much they have been charged.
Card companies will also now have to run a credit check to ensure customers can realistically afford any offer of an increased credit limit. Previously credit card companies were free to raise customer’s credit card limit, which is seen by many as a temptation to spend more.