Our response to Labour credit card proposals
September 25, 2017
In response to the announcement that Labour plans to cap interest payments for people with persistent credit card debt, Mike O’Connor, Chief Executive of StepChange Debt Charity, said:
“We welcome the focus on the issue of persistent credit card debt and the role it plays in the financial problems faced by millions of people across the UK. The way in which financial products are designed, especially credit cards, with low minimum repayments and high credit limits, can allow people to rapidly build up substantial debt levels and become trapped in spirals of unsustainable borrowing.
“As well as action to limit the scale of debt problems, we need action to prevent people falling into and becoming trapped in persistent debt in the first place. With credit cards, increasing the levels of minimum repayments and fixing minimum repayments so that they don’t decrease alongside the balance are simple and low cost ways that this could be achieved. We urge the Financial Conduct Authority to consider these proposals as part of its forthcoming remedy package.
“With levels of outstanding borrowing approaching levels not seen since the economic crisis and households are increasingly financially vulnerable, debt is an issue that needs to become a priority for policymakers now. Both the Conservative and Labour Parties committed to proposals for a ‘Breathing Space’ scheme to help households affected by problem debt. This is a policy with cross-party support that can make a significant difference, and we urge the Government to act now.”