Play your cards right or you will lose them
DAILY EXPRESS reader Mike, from Derby, wrote to me this week after his credit card had been suspended. It turned out this was a consequence of rules brought in by the Financial Conduct Authority in March 2018, which could affect thousands of people with credit cards from this month. If you have a credit card, you need to fully understand the regulations. Here’s what you need to know:
WHAT ARE THE NEW RULES? They took effect from September 1, 2018. Providers have an obligation to take action over customers who have been in persistent debt for 18 months. This is defined as when a customer has paid more in interest, fees and charges than they have repaid of their borrowing. The card provider must act as follows: Contact the card holder to explain the benefits of raising payments and tell them where to get debt help and advice. Send a reminder after 27 months if it looks like the situation is unlikely to improve. This should also be accompanied by a warning that their card may be suspended if they do not improve the situation. If the card holder has been in persistent debt for 36 months, offer them a way to repay their balance over a reasonable period – typically between three and four years.
WHY MIGHT MY CARD BE SUSPENDED?
This month is the 36-month anniversary since the changes came into effect. For those in persistent debt for the past 36 months it is likely that their card provider will simply suspend their card if they are unable to agree a payment plan. Mike was asked to pay an additional £160 per month off his card balance and when he refused the provider suspended the card.
WHAT CAN I DO?
Card providers cannot suspend or cancel a card without having a justifiable reason. My view is that if you put forward a sensible proposal/payment plan, there will be no “justifiable reason” to suspend or cancel the card. However, if you simply ignore your card provider you will be handing them a justifiable reason on a plate.
More advice from Dean on www. theconsumerlawyer.blog