Independent UK: The great credit card scandal

The great credit card scandal
Companies defy ministers by increasing charges despite plunging interest rates

By Kate Hughes, Deputy Personal Finance Editor, and Andrew Grice
Tuesday, 9 December 2008


Credit card companies are facing an investigation by competition watchdogs after defying government warnings to improve their lending practices.

An analysis by The Independent has found that the cost of card borrowing has risen over the past three months despite three cuts to the Bank of England base rate. Cardholders are now facing average interest rates of 17.7 per cent on credit cards, up from 16.6 per cent 12 months ago.

The Business Secretary, Lord Mandelson, had given providers two weeks to come up with fair principles to help cardholders manage their debts following a summit with card providers in November. By Thursday, the Government is expecting proposals from the industry on how it will implement fair principles on existing debt, responsibly provide credit and support households in difficulty.

Failing to do so could see the card companies facing investigation by the Office of Fair Trading (OFT), but so far card providers have made no move to reduce the expensive lending rates which so often plunge debtors into further financial hardship.

One government source said last night: "We are not backing off. If the companies don't move, if necessary, we will go down the OFT route." ........(more)

The complete piece is at: http://www.independent.co.uk/money/loans-credit/the-great-credit-card-scandal-1058003.html

It won't take Sherlock Holmes to figure out whodunit. It's a matter of taking those companies and telling them to lower rates or be nationalized.