Tuesday, October 27, 2009
redit card borrowers will see minimum repayments double under new proposals
posted by Shawn Gao
he move is part of a package of measures announced by the Government to tackle consumer debt amid the recession.
It said forcing credit card companies to raise the minimum monthly repayments would encourage people to focus on paying off their debt.
The minimum amount that the majority of companies currently require card holders to repay should be raised from just 2 per cent of the amount owed, to 5 per cent, it suggested.
The increase could cut the time a borrower takes to repay a £1,800 credit card debt to ten years – compared with 40 years at 2 per cent. It could also reduce the amount repaid by almost £4,000, according to the Department for Business, Innovation and Skills.