Card trick ‘working wrong kind of magic on consumers’

With the credit crunch leaving so many suffering from high levels of credit card debt, there have been many proposals and ideas for tackling the problem, both in the UK and overseas.

In Britain, this included both the Conservatives and Liberal Democrats proposing some curbs on rates in their election manifestos, such as caps, while new regulations agreed between the outgoing Labour government and the storecard industry were aimed at reducing the potential financial shocks such traditionally high-interest items could inflict.

Attention has been focused recently on a new regulation introduced at European level, which spokesman for moneynet.co.uk Andrew Hagger warned is sure to harm people across the continent and in the UK.

Speaking on the BBC Wake up to Money podcast, he noted the new regime has been introduced with the intention of increasing the level of transparency as applicants compared rates on different cards.

However, he noted, this includes a provision for 51 per cent of those approved getting the best rate advertised – which is actually a fall from the 66 per cent who would get this previously.

Mr Hagger noted: “You’ve now got 15 per cent more people who are actually being shifted onto higher deals.”

And there is nothing much consumers can do about it, he added, stating: “It all comes down to your own personal credit record as to what rate you get granted so it is really out of your control.”

This may mean, therefore, an increase in the level of credit card debt in Britain, which, according to the latest Credit Action figures, is already piling up with £1.156 billion worth of purchases being made on plastic every single day.

By James Francis