New Bank crackdown over credit card boom
THE Bank of England is set to launch a crackdown this week on interest-free credit cards amid fears that they could trigger a new consumer debt crisis.
So-called teaser deals have proliferated in recent years. They allow Britons to move thousands of pounds of debts built up elsewhere on to the cards at zero interest for periods up to 43 months. But Bank chiefs claim the offers encourage borrowers to take on debt they may not be able to repay if the economy slumps. That could leave card providers shouldering huge losses – and exacerbate a downturn.
The Bank’s Financial Policy Committee meets on Wednesday to decide a course of action.
Britons have been borrowing heavily recently, with the total amount lent on credit cards, loans and overdrafts growing at nearly ten per cent a year.