New credit card rules come into play this week
Many consumers are set to benefit when it comes to their credit card debts, as a result of new credit card rules that are set to come into play this week. Millions of people are set to benefit from the new regulations, but there are concerns that credit card companies will look for other ways to recoup their profits, so consumers are being warned to be on their guard.
New regulations are set to come into force from this weekend coming, which marks the start of 2011. The new rules were initiated whilst Labour was still in power, and this followed an investigation into credit card charges and way that card provider operated when it comes to repayments on the cards. It was decided that customers needed to be treated more fairly, and new regulations were devised, which would come into force from the start of the year.
The new rules will involve a new legal minimum repayment being brought in, and this is designed to ensure that cardholders who make minimum repayments are now able to clear their debt more quickly rather than being left for years or even decades with no hope of ever clearing the debt.
The major change to the way in which these companies operate is that any repayments made by consumers will need to be applied to the most expensive debt on the card first rather than onto the cheapest debt, which is what many credit card firms are doing at present.
However, consumers are being urged to ensure that they look out for any new charges or increases in the rates of interest charged by card companies, as some may try sneaky tactics to try and make up for the losses that they suffer from the new regulations.
Credit cards – a gain or a pain?
Credit cards have become more and more popular over recent years, and whilst they were once used only by the elite few who had the financial status to be able to get their hands on a flash credit card they are now common financial tools for many people from all sorts of financial backgrounds. Credit cards, whilst very useful in some circumstances, can be seen in a good light or a bad light, and this often depends on how the consumer uses the card.
There are many people that have credit cards who then start to believe that their cards are the height of financial evil, leaving them in a spiral of worsening debt, and resulting in their financial future being ruined. However, there are also many people that see their credit cards as invaluable tools that offer convenience, ease, and flexibility.
The fact of the matter is that your credit card is what you make it. If you have a credit card that you use, and you continually miss repayments, only ever make the minimum repayment, over regularly overspend on it even though you may not be able to afford to do so, then the likelihood is that your credit card is going to cause your nothing bur problems and headaches.
However, if you are one of these people that has a credit card, uses it responsibly, makes timely repayments, and pays off as much of the balance as possible each month then your credit card can be a very versatile, useful, and convenient tool to have at your disposal.
Benefitting from a credit card is largely about the way that you use and repay the credit card, but is also related to choosing the right credit card in the first place. There are many different types of credit cards to choose from these days, and choosing the right one can make all the difference to how useful, beneficial, and affordable having a credit card will be for you.
For example, if you are planning to make a large purchase and you want to spread the repayments you could look for a 0 percent interest purchase credit card, where you could enjoy a generous period of interest free credit, which means that you could effectively avoid having to pay any interest. On the other hand, if you repay your balance in full each month you could go for a rewards based credit card, where you could earn a little something back from the credit card company simply for using your card.
Many struggling with credit card bills
Credit cards have become invaluable financial tools for many people across the UK, and many people use their cards on a regular basis to pay for all sorts of things, from one off luxuries to everyday items, particularly in the current financial climate where credit cards have become something that more and more people are reliant on to help tide them over financially.
However, credit card debt is something that can very easily spiral out of control, and many people that end up having to seek expert advice about their debts find that they have ended up in a financial mess because of credit card debts that have become too difficult to handle. A report from the Bank of England has now shown how consumers are continuing to struggle with credit card debt in the ongoing difficult financial climate.
According to the report more than 25 percent of households in the UK are struggling to repay their credit card debt, with banks said to be continuing to try and make as much money as possible from households. It was found that more than one in four households were finding it hard to cope with their unsecured debts, and found that trying to pay these debts had become a ‘burden’.
The Bank of England said that the worrying trend was a sign of the ‘higher loan interest payment costs following the increase in credit card interest rates over the past year.’
The central bank added: ‘Interest rates on unsecured debt tend to be much higher than mortgage interest rates and appear to have been less sensitive to the changes in monetary policy (interest rates).’
Over two thousand consumers were polled as part of the research, and officials claim that High Street lenders are continuing to try and make as much money off credit card customers who are unable to get other forms of credit.
Popularity of credit cards increases
It has been claimed in a recent report that the popularity of credit cards is increasing amongst consumers in the UK, with many people now favouring credit cards over other payments methods. With credit cards consumers have total flexibility and freedom, as they are able to use their cards to pay for purchases in shops and eateries, but can also use them to make purchases online, by phone, and even on forms that are sent by post to place orders.
Chris Morling, from Money.co.uk, said that credit cards seemed to be gaining popularity amongst shoppers in the UK, and said that this was a growing trend. He also added that he hoped that consumers were also becoming more savvy with regards to spending and repayments on credit cards, as this could make credit cards an invaluable tool for some consumers rather than a debt machine that would be hanging over them for years to come.
Morling said that as long as consumers were cautious and savvy when using credit cards some could enjoy paying no interest for their spending and borrowing, and others could even earn a little something back from the credit card providers. He added that consumers could find that credit cards were an affordable alternative to having to carry cash around, and they could also be used to enhance cash flow each month.
Another industry official said: “Credit cards can be, and have become, very convenient financial tools, but they are only useful to those that are savvy about how to best use and repay the card. If they are used irresponsibly, if consumers do not look for the right cards, and if people only make minimum repayments, they can become a real financial burden, and can lead to spiralling debt levels.”