Credit card firms urged to lower interest

The government has urged credit card companies to help consumers in efforts to clear debt.

Providers were summoned to a meeting with business secretary Peter Mandelson and consumers affairs minister Gareth Thomas following findings that borrowers are being charged particularly high interest rates.

A recent study by Moneyfacts.co.uk found that the average interest charged on such forms of finance is over 17 per cent, despite the Bank of England lowering the official base rate to three per cent.

Speaking ahead of the meeting, Mr Thomas explained that companies would be asked to draw up principles to aid those facing credit card debt.

“The government is deeply concerned that borrowers aren’t getting a fair deal. That’s why we’ve taken swift action to bring the industry in to look at how costs are being applied to people’s existing debts,” he said.

Prime minister Gordon Brown expressed concern over credit card charges earlier this month, after one provider was found to have increased interest by ten per cent overnight.

By Andy Mackay