The prime minister has condemned credit card companies for raising their rates during a tough economic climate.
Following Alistair Darling’s demand that mortgage lenders pass on last week’s dramatic interest rate cut, Gordon Brown is following suit with credit card companies.
Credit card debt leads to home repossession
Mr Brown went on to criticise the legal loophole which allows creditors to force a borrower to sell their home to repay unsecured debts through a ‘charging order’. Following reports that some borrowers with as little as £1,000 of credit card debt have been forced to sell their homes through charging orders, the Prime Minister has called for an emergency meeting with credit card company bosses.
Which? Money researcher Martyn Saville said ‘Credit card companies should be doing everything in their power to help consumers struggling to repay debt. The Prime Minister is right to take credit card companies to task over the inappropriate use of charging orders. While he’s there he should also tackle card companies about other practices including:
- The increase in cards’ APR despite the recent falls in the base rate
- The sale of Payment Protection Insurance (PPI) to people who have little or no chance of being able to claim
- Unsolicited increases in customers’ credit limits and reductions in their monthly minimum repayment, making it easier for consumers to get into unmanageable debt
- Unsolicited credit card cheques and pre-filled application forms being sent out, encouraging further debt and increasing the risk of ID fraud.’
There are several advice organisations offering free help to consumers struggling with debt, including the Consumer Credit Counselling Service, Citizens Advice and National Debtline – see the Which? report on how to deal with debt for more advice.
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