Labour Commits to Capping Interest Rates on Credit Card Debts
September 26, 2017
The Labour Party has pledged its commitment to a plan that would see the interest levels charged on credit card debts capped in the interests of consumer protection.
According to Labour’s shadow chancellor John McDonnell, his party would introduce caps as a means of tackling what he described during a recent speech as being a “debt crisis” in the UK.
Mr McDonnell was speaking during the Labour Party conference in Brighton where he suggested that the issue of falling real wages has led to serious problems with credit cards and a situation in which a great many people rely on borrowing to cover their most essential expenses.
Figures released recently by the government-backed Money Advice Service revealed that there are roughly 8.3 million people in the UK who are living with some form of debt problem.
Meanwhile, the collective scale of consumer debts across the country is rising at a pace and with a consistency which the Bank of England is concerned could soon cause serious problems for lenders.
Against that backdrop, the Labour Party’s foremost economic spokesman has called on the government to apply a cap on credit card interest rates in the same way as limits were recently set on the charges levied by payday lenders.
Mr McDonnell told his party’s conference that he wants to see the government do more to protect people who are struggling to cope with their credit card debts and insisted that Labour would certainly be aiming to do so if they were to form a new government in the coming years.
The stated aim of a cap on credit card interest rates would be to limit the amount that could potentially be paid back by a borrower to twice the initial amounts that they borrow.
The Financial Conduct Authority (FCA) is currently carrying out a review of the dynamics within the UK’s credit card industry and how they impact consumers and borrowers.
According to the FCA, there are roughly 3 million Britons who use credit cards and consistently find themselves paying more out as interest fees and charges than they are able to pay off as debt repayments.
If you are finding it consistently difficult to fend off your creditors and you live anywhere in Scotland then Scotland Debt Solutions can help. You can contact us directly to arrange a free and confidential consultation.