New Credit Card Measures: How They Affect You
Credit card customers have been given a boost after new rules to protect them from unfair treatment were launched today (15 March).
The best news among the measures is a change in what banks call the allocation of payments. Previously, many lenders had used customers'
payments to write off the cheapest debts on their credit card first - meaning that more expensive debts were allowed to mount up. However, today's
change will bar this practise, which at present affects around a quarter of all credit card accounts.
Under the new regulations agreed between the credit card industry and government, the minimum monthly amount that credit card customers have to
pay back will also increase to cover all interest fees and charges, plus 1 per cent of the principal borrowing. The aim of this is to discourage borrowers
from allowing expensive debts to build up.
How this affects you
Here's the lowdown of the main changes and how you will be impacted:
â€¢	You will now always pay off your most expensive debt first. Previously, many lenders had sneakily allowed consumers to pay off cheap debt first,
allowing them bigger earning on interest
â€¢	New credit card customers will have a minimum payment that will cover at least interest, fees and charges, plus 1 per cent of the principal. This
will not be an increase for many customers, who may already have minimum payments above this level, but is aimed at encouraging borrowers to
change their repayment behaviour
â€¢	If you regularly repay the minimum on your card, you will be reminded that this is the most expensive way of paying off your debt
â€¢	You will have a 30-day â€˜opt out' period for any increase in the credit limit on your card.
â€¢	Existing debts will have a 60-day notice period before any increase in interest rates occurs.
â€¢	A ban on offering unsolicited credit to people in financial difficulties
A baby step forward
The proposals have been greeted with a largely lukewarm response from pressure groups, with Credit A