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Next on the list, credit cards firms?

Gordon Brown is set to move his crusade from the banking sector to the credit card sector over the next few weeks as credit card companies flatly refuse to join in the recent reduction in interest rates. This is a point we have questioned a number of occasions as interest rates have risen over the last few months at a time when UK base rates have fallen from 5% to 3%.

It is not clear how Gordon Brown is to hit the credit card companies though he may take a softly softly approach initially such as that taken with the UK banking sector. However, the comments being attributed to the credit card companies suggest that they will not reduce their rates without a fight and appear to have a number of arguments to back up their situation.

UK credit card debt has never been higher and many credit card companies are seeing a major increase in their default levels which then forces them to pass on as much as possible of the write-offs to existing customers. They are highly unlikely to reduce their rates substantially while default levels continue to rise although a possible threat of a competition commission investigation may well do the trick.

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