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Regulation changes mean thousands could have their credit card accounts suspended


Thousands of Brits could face having their credit card accounts suspended next month (February 2020) as new rules kick in.

The changes, originally introduced in September 2018, ordered credit card providers, including banks such as RBS, Lloyds and Barclays, to identify those considered to be in ‘persistent debt’ with their credit cards and give them 18 months to bring the balance down.

This meant that:

  • At 18 and 27 months the customer gets a written reminder to do something.
  • If the customer is still paying the minimum at 36 months, the credit card lender is meant to actively start dealing with the customer through a number of means – they could come to an arrangement with the customer, they could offer some flexibility or refer them for advice.
  • If the customer still doesn’t respond they can suspend the credit card or close the account.

The first 36-month letters are due to be sent out this month (January 2020).

Speaking of the regulations in 2018, Christopher Woolard, Director of Strategy and Competition said:

“These new rules will significantly reduce the numbers of customers with problem credit card debt. Credit cards offer customers the flexibility to manage their finances and repayments, but with this, there is a risk customers can build up and hold debt over a long period of time – without making much headway on the outstanding balance.

However, Citizens Advice Scotland (CAS), despite supporting the changes, has warned that they could backfire, stating that:

‘there is concern that others will not have the funds within their budgets to afford to make changes to what they pay and they may experience a financial crunch as a result.’

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Although the regulations were designed to help those in persistent debt, it seems they are essentially forcing them into a payment plan they may not necessarily be able to afford.

CAS Financial Health spokesperson Myles Fitt, further backed the statement, explaining:

“Persistent credit card debt is being tackled by the FCA and some people who have not been paying off their credit cards may be in for reality shock in the New Year if they have been ignoring persistent debt letters coming through their letterboxes.

These changes will help some people to pay off their debts quicker, but we’re concerned about people who are forced to live in persistent debt because of insecure incomes in the first place. These changes could be a real problem for people who are unable to come to an arrangement with their credit card lender and this may trigger increased demand for help with debts.”

It was determined by the FCA that around 5.6 million credit card accounts are owned by people across the UK who are struggling with their finances, and nearly two million might fail to up their payments before they reach the end of the 36-month period.

Exactly how many people will be cut off is unknown, but it seems that banks and providers are still contacting customers right now as we reach the end of the first 36 months.

If you’re struggling with credit card debt and need some help, contact us today on 0808 2234 102. Our advisors are on hand to offer you free and confidential advice to find a solution that’s tailored to your situation.

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