Government pressure to make credit card charges clearer

FRIDAY, SEPTEMBER 22, 2006

Despite government pressure to make credit card charges and interest rates clearly available, consumer groups still want more changes

With pressure from the government, all lenders have now agreed and are required to give clear details about the handling charges and interest rates involved when using card checks. They have stated that they will make this information clear and will announce it to a potential customer, not hide it in fine print in a long list of their terms of service.

However. It now seems that the government has eased on the enforcement of these regulations and lenders are finding loopholes in the system.

Many consumer groups argue that the government regulations have made no progress as many customers are still unaware of the extra charges that are associated with card checks, especially those that are unsolicited.

The Department of Trade and Industry has announced that according to multiple research studies, there is nothing that connects card checks to increased debt, but regardless, many groups want to force banks to give more information about the financial costs of using these checks. They want new laws and regulations to require all lenders to give explicit details on the interest level charged, the level of legal protection offered, and other pertinent information to all those who are interested in card checks.

"The extra information will go a long way in helping consumers and will make it easier for them to find the type of finance they want," said consumer minister Ian McCartney.

However, Mr. McCartney went on to say that the government would only look into the case when the industry has “failed to take the necessary steps” or there was clear evidence that the use of checks was linked to financial insecurity.

"It is clear that self-regulation amongst banks is not working to protect consumer's best interests and there is a danger that the people being targeted by this practice could be plunged into serious debt," said Nick White, head of personal finance at price comparison firm Uswitch.