Credit Card Industry New Regulation

17th March 2009

The government is looking to introduce new regulation to the credit card industry as part of it's plan to curb people temptation to get into debt. The government is planning to introduce new legislation that will stop credit card companies from raising the credit limits of customers who have not requested such an increase and also want to ban firms from sending out unsolicited credit card cheques to card holders.

"We are concerned that people may be tempted to borrow irresponsibly if credit card companies increase borrowing limits without this being requested by customers, or send out unsolicited credit card cheques," said Consumer Affairs Minister Gareth Thomas.

Credit card cheques are often sent, unsolicited, to customers who are then invited to use them to make purchases or payments with them and can then settle the amount on their next credit card bill. Credit card cheques may often have more expensive fees and charges than credit cards themselves, and any items bought with them do not enjoy the same protection against the goods being faulty.

The credit card industry defends the use of credit card cheques as an alternative way of drawing on a credit card account where the credit card itself it not accepted, for instance by a very samll business or tradesman. and says that only 7% of the cheques that are sent out are actually used.