UK credit card 'bill of rights' expected
The government is expected to review credit card practices with Obama-style credit card industry legislation today.
The Department for Business, Innovation and Skills (BIS) is publishing a white paper today, which is expected to recommend a ban on unsolicited credit card cheques as they can potentially take people further into debt then they intended.
In 2007, 300,000 consumers used these cheques to pay household bills, according to uSwitch.com.
But the cheques attract a high rate of interest - 26.71 per cent on average - and the interest is incurred from the day the cheque is cashed, as there is no grace period.
Consumer groups have called for a ban on the practice of sending out these cheques without credit card customers asking for them.
In May, president Barack Obama signed new rules to protect consumers - dubbed the Credit Cardholders' Bill of Rights - into law.
Louise Bond, personal finance expert at uSwitch.com, said: "It is a breath of fresh air to see that at last, the government is taking the credit card industry to task, following closely in the footsteps of the US."
The comparison site suggested the white paper should also look at the high fees involved in cash advances and sharp increases in interest rates.
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