Credit card companies ease up

Credit card providers have agreed to provide customers in financial difficulty with extra time to repay their loans.

The UK payments association, APACS, along with some of the largest credit card providers, met the government on Thursday to outline a new industry standard restricting the imposition of interest rate increases for customers and help for those struggling with their finances.

From 1 January 2009 card providers will suspend collection of debts for 30 days for customers who are making provisions for debt repayment plans, and may extend this to a further 30 days if the customer is making demonstrable efforts with the debt advice agency to find a plan.

Customers willl also be able to take out a credit card and remain on the initial rate to the first twelve months. Following this they must be given 30 days notice of any changes made to the APR on their card and will be given the option to close their account and repay the balance at the existing interest rate.

The imposition of the new rules, coupled with reductions in APR could result in the introduction of annual fees for credit cards, according to PricewaterhouseCoopers.

In its annual report into credit card use, it found that while profits in the UK credit card market increased over the past 18 months, they are unlikely to be sustained and could lead providers to impose new charges to consumers.