Credit Card Landscape 'Set To Be Reshaped'

Government proposals are set to "reshape” the credit card landscape for consumers, one expert has predicted.

The Consumer Credit Counselling Service (CCCS) made the comment after legislative plans were revealed to tackle unfair practices by credit card companies.

Under the new measures, lenders would be banned from hiking interest rates on existing debts and the minimum payment level would be increased in a bid to help consumers repay mounting bills.

The government's proposals follow a consultation launched by the Department for Business, Innovation and Skills (DBIS) into credit and store cards. It aimed to examine whether or not credit and store cards intend to give consumers a fair deal.

The Consumer minster said he wanted credit card firms to "get their act together" and do more to protect the consumers their business relies upon.

He called on the "most important people" in the industry to step forward with their views and experience in order to carve out a more positive future for the credit card market.

He explained: "The government is putting forward new measures which we believe will give consumers a better deal."

"My opinion is clear; the current relationship between card companies and consumers cannot go unchallenged. We need to put the customer back in the driving seat."

Areas that the minister is particularly concerned with include the rules that govern how credit card debt builds up and how these bills are paid off and placing restrictions on increasing credit limits without prior consent.

According to research published earlier this year, nearly two-thirds of credit card users don't understand that their cheapest debt is paid off first.

Most credit card holders, perhaps logically, assume that a monthly repayment towards an outstanding debt would go towards the outstanding sum with the highest rate first. However, in the majority of instances credit card firms do not operate on this basis.

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