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Published on January 13th, 2011 | by Pete

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Credit Cards: Dirty Tricks Forbidden

This is great news for everyone (including me) who has a credit card. There’s nothing that irks me more than credit card company profiteering. So I’m delighted that the chaps at Great Britain HQ have finally made some mean credit card conditions/tricks prohibited. In 2011 the following will apply:

1. Rate increases can be rejected by you (within 60 days)

Providing you have never defaulted on your credit card payments, if your credit card company write to you with the news that they intend to increase your APR, you have the right to tell them that this will not be happening. And then it won’t. That must feel amazing! Lenders are legally obliged to tell you that you have this right, but of course, they are not going to make it easy for you, and will try and baffle you with jargon. Lenders will often inform you of your right to reject the rate increase by stating that you have the option to ‘close the account’. What they are actually saying is that if you want to reject the increase, you must promise not to borrow any more.

2. Lenders must use your monthly repayment to repay the most expensive types of debt first

Traditionally, lenders have lined their pockets by allowing people to shift debt on a 0% balance transfer to their credit cards. This was excellent if people didn’t then spend on the cards, but when the need becomes great, people often do. As the lenders can regularly charge 18% interest for new purchases on these cards, people can often find themselves trapped in an ever spiralling credit card debt. This is primarily because the lenders use your repayments to reduce the cheapest debt first, meaning that the expensive debt accrues interest rapidly, and cannot be touched until the cheap debt is paid off. In 2011, this is changing. An agreement has been made and now the most expensive debt will automatically be paid off first. Most credit card lenders have already started, and the slackers trying to suck up every last extra penny from your finances (Lloyds TSB, NatWest, RBS) will have implemented the change by the end of January 2011.

So there we have it. Excellent news methinks, and a step forward in making things a little fairer.

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