Government to outline credit card rules

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Credit card companies are set to be banned from sending out unsolicited cheques and raising customers' credit card limits without permission, according to a government white paper released today.

The review will also consider whether minimum monthly repayments should be increased to help people repay debt quicker, and whether card companies should be forced to put repayments towards clearing the cardholder's most expensive debts first.

With the number of vulnerable people in unmanageable debt on the rise, Lord Mandelson's white paper is an attempt to rein in the power of the credit industry.

The paper charts detailed policy plans and could be on the statute books by next year.

It gives the example of a £500 credit card cheque which has been paid back over 12 months, but carried additional charges and interest of £150 at an annual percentage rate of 30 per cent.

According to credit action total UK personal debt at the end of May 2009 stood at £1,459 billion.

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2009-07-02 13:44:21 © Moneyextra.com