It follows credit card companies increasing average interest rates to a 12 year high of almost 19 per cent.
New changes to credit card law are aimed at tackling the reducing the amount of consumer debt and irradiating irresponsible lending practices among lenders.
A spokesperson from a leading financial website described the new laws as “good news”, explaining: “These reforms should be a real step forward in introducing better rights for borrowers.”
This change comes from card levying different rates for different transactions, such as 0 per cent on balance transfers but 20 per cent on purchases.
Most lenders will usually allocate repayments to the cheap debt first. However, this means that they leave the expensive debt unpaid which increases interest charges.
It is understood that the proposal to increase the minimum payments will be rejected. However, lenders will be forced to explain the financial impact on their business for only making the minimum repayments on annual statements.
Since the financial climate worsened in the UK, credit card providers have been increasing rates because of fears that borrowers will refuse or be unable to pay their debt.
While the average rate on all credit cards is 19 per cent, some card holders will pay even more. The stress of owing a credit card has led to more consumers trying to find information on credit card tips.
Fees for balance transfers, cash withdrawals and foreign transfers also continue to go up, meaning customers are paying more across the board. The Department of Business declined to comment.
