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Government bans credit card cheques

August 5, 2009 by admin  
Filed under News, News-Credit-Cards

1 Comment

The government has recently updated credit card regulations and put a ban on credit card cheques being sent out to consumers by credit card companies.

The move comes as the government and regulators try and crack down on issues relating to credit card companies, and may mark the beginning of a number of regulatory changes that could see credit card firms losing revenue.

Over recent years many credit card firms have started sending out credit card cheques to consumers who have not asked for them. The cheques can be used to make payment, with the money coming off the credit card, and providers even encourage consumers to write themselves and cheque and put it into their bank accounts, again with the cash coming off their credit cards.

However, they do little to point out that the interest that will be charged will be the same as any cash transaction or withdrawal on the card, which is typically far higher than normal.

The new regulations were put forward by the Business Secretary Lord Mandelson as part of a white paper. Lord Mandelson has expressed concerns over the huge debt levels that consumers may end up facing as a result of credit card borrowing, and his aim is to cut down on the risk of people falling into this sort of debt, especially in the current financial climate.

However, the changes could mean huge financial losses for credit card firms, and some industry officials are concerned that they will find other ways to make more money from cardholders, such as bringing in high annual fees or increasing interest rates even further despite the fact that the average rate has already broken through the 18 percent barrier.

Tags: Revenue, cheque, cash transaction, card, industry officials, beginning, credit card cheques

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Comments

One Response to “Government bans credit card cheques”
  1. Simon @ shrewdcookie.com says:
    August 9, 2009 at 7:00 pm

    This is excellent news – I have come across people in the past who have been using these “credit card chqs” just like normal chqs you would find with a current account.

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