New rights announced for credit card users

New rights for Britain’s credit card users that will save consumers millions of pounds and give people more control over their finances have been announced by Prime Minister Gordon Brown.

There are five new rights in total, and they are as follows: right to repay, right to control, right to reject, right to information, and right to compare. Right to repay means that repayments will always be put against the highest rate debt first. Right to control will ensure that consumers have the right to choose not to receive credit limit increases in future and the right to reduce their limit at any time. Right to reject will allow consumers to have more time reject increases in their interest rate or credit limit. Consumers at risk of financial difficulties will be given advice on the consequences of paying back too little through the right to information, whilst through the right to compare, consumers will have an annual statement that allows for easy cost comparison with other providers.

In addition, consumers who are at risk of financial difficulties will be protected through a ban on increases in their credit limit as well as the ban on increases in their interest rate, and card companies will work with debt advice agencies to agree new ways they will provide targeted support to consumers at risk.
The new rights were secured in an agreement between the Government and the credit and store card companies negotiated in the light of feedback from thousands of consumers to a Government consultation on credit cards. The key changes will be introduced by the industry this year and given statutory force as soon as possible.

Gordon Brown said:

“Step by step, we are reinventing the financial services industry after the global financial crisis and moving the balance of power back towards consumers. These new rights will put an end to the irresponsible lending practices that people have been most concerned about, and help cut the cost of borrowing.”

The Government estimates the new rights will save consumers almost £300 million a year and one industry forecast predicts customers will gain around £500m.