Credit companies accused of ‘dirty tricks’ to boost profits

Credit card companies have been accused of employing dirty tricks to encourage people to get into more debt.

A report by This is Money claimed firms have been quietly scrapping rules that were designed to protect consumers and are using a variety of different measures to trap unwitting customers. This is in response to new EU guidelines which are set to limit the level of transaction fees lenders can impose on their clients. According to the study, this has left many businesses concerned about future profits.

Debt experts stated companies have been sneakily encouraging struggling borrowers to take out extra credit, sometimes at around £1,000 a time. This is often said to occur when the customers are close to exceeding their limit or have missed a few payments. Although it is possible to refuse these hikes, it is the responsibility of the individual to turn them down.

In addition, firms have been accused of lowering the minimum amounts consumers have to pay each month, meaning it would take them longer to clear off what they owed. Levels of interest have also been raised, so people making lower instalments will also be having to fork out more in the long run.

Borrowers are being hit while travelling abroad as well, with some companies increasing their charges to use cards overseas. Meanwhile, some lenders have also raised the amount of money customers are charged for withdrawing funds from cash points and perks have also been squeezed.

A spokesman for the UK Cards Association commented: "Credit card providers offer a credit limit increase following stringent checks, with a rigorous exclusion process to ensure increases are offered only where the issuer is convinced the cardholder can afford it."

He added consumers were given 30 days to refuse the hike. Lenders, according to the report, are hoping many people simply won't bother.

By James Francis