Credit cards - APACS details initiatives

APACS, the UK payments association, has launched its latest report into transparency and responsibility in the credit card industry.

'Sharing Best Practice', details the steps the industry has undertaken to benefit the consumer, and provides an update on responsible lending initiatives such as increased data sharing.

Over the past year the industry has focused its efforts on improving the information available to customers to help them make responsible borrowing decisions.

Card companies have also continued to work together to agree guidelines for responsible lending. Industry initiatives over the last year include extending the idea of the Summary Box - first introduced in 2003 - and creating a version of the Summary Box for credit card cheques.

To be included with all credit card cheques by the end of 2006, the Summary Box provides customers with clear information, and highlights key features like the Annual Percentage Rate APR, interest rates, the length of the interest-free period and any charges that might be incurred.

Meanwhile, standard terminology has been introduced in the Summary Box, to help consumers understand better the terms and expressions regarding interest rates and charges.

Elsewhere - and in a move aimed at helping prevent over-indebtedness - a number of banks have committed to increasing the amount of data to be shared about cardholders' behaviour in respect of credit card accounts. The aim of this initiative is to show banks the way consumers are using their cards, and to highlight those who are potentially in financial difficulty. It is proposed that data such as whether the cardholder is only making minimum repayments on credit cards, or the extent to which they are making cash advances, will be shared. It is planned that companies will start to share this data during 2007.

In addition to the above initiatives there has been the launch of the industry's 'Best Practice Guidelines', bringing together in one report a set of guidelines developed by the industry to promote responsible lending and increased transparency. Many of these guidelines are already enshrined within the Banking Code, with new initiatives to be submitted to the Banking Code review next year.

Finally, APACS has launched a consumer advice series, a set of downloadable, reader-friendly guides to help cardholders to make sensible decisions about choosing and using credit cards.

Recent guides have focused on using cards abroad, cards and students and understanding credit records.

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2006-10-25 12:53:16 © Moneyextra.com