Ministers call credit card companies into line

by Gill Montia

Story link: Ministers call credit card companies into line

Recent reports that credit card companies are increasing rates in time to catch out Christmas shoppers and in defiance of this month’s 1.5% cut in the base rate, have prompted ministers to meet with the bosses of leading credit card providers today.

It is understood that business secretary, Peter Mandelson, and consumer affairs minister, Gareth Thomas, could demand an Office of Fair Trading investigation into their practices if credit card companies ignore Government demands that the base rate cut be passed on to consumers.

News of the meeting comes only one day after the Governor of the Bank of England, Mervyn King, refused to rule out the nationalisation of UK banks that have taken advantage of a taxpayer funded bail out and Treasury guarantees but are reluctant to restore their levels of lending to individuals and businesses.

Earlier this month, research from financial analyst, Defaqto, showed the average annual percentage rate for credit cards rising from 17.2% in May to 17.6% in November, while over the same period the base rate fell from 5% to 3%.

Store card providers were some of the worst offenders; rates charged by retailers Principles, Karen Millen and Oasis having increased during the period by 4% to 28.9%.