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Credit card bill proposes interest cap on borrowing

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A Labour MP has proposed a bill that would limit the total amount of interest paid on credit card borrowing to prevent debts from “spiralling” out of control. At the first reading of the Credit Card Debt Limit Bill 2012-13 on 27 November, Yvonne Fovargue explained that under the bill, credit card companies would be required to discharge a debt when three times the equivalent of the principal sum owed has been paid in interest.

 

She told parliament that while payday lenders have been the focus of media attention recently, credit card companies are responsible for causing detriment to a larger number of people. Fovargue said: “The number of people seeking help with credit card debt has risen sharply in the past five years. “Whereas people previously used credit cards for luxury or exceptional purchases, many are now using them simply to make ends meet, as well as committing to further credit card borrowing when one card is maxed out, in order to plug the gap in their household finances.”

 

She added that the aim was not to let people off lightly or allow them to default on their debts, and stated that credit card companies would “get their profits”. “It is about giving people a guarantee that their debt would be paid off at some definite future date and that it would not spiral upwards.” Fovargue gave an example of a Lloyds credit card with £1,000 on it, which will take 17 years and nine months to pay down the amount using minimum repayment levels. The bill was introduced to parliament under the ‘ten minute rule’, which allows an MP to make their case for a new bill in a speech lasting up to 10 minutes. It will have its second reading on 25 January 2013.

 

Link: http://www.credittoday.co.uk/article/14646/online-news/credit-card-bill-proposes-interest-cap-on-borrowing


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This is long overdue,I would like to think that their will eventually be a Cap on Credit Card Interest,there is no justification for interest rates of 20% to 40% made by these companies,when they can borrow money at 5% or less,they are no better than the Payday Loan Sharks

 

FS

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A very long time in coming. The charges and interest rates are still disgraceful.


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