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Barclaycard wakes up to the UK recession

It has been revealed that Barclaycard, under pressure from the UK government, will introduce an interest rate freeze and possible reduction for 12 million customers. Interest rates in general will be frozen until June at the earliest but some 3 million of the company's low risk customers could see their rates fall by between 2.4 and 5 percentage points. The move comes at a time when credit card companies in the UK stand accused of failing to pass on recent interest-rate reductions to their customers.

While the move by Barclaycard is welcome, more important is the company's promise to work with customers who are in arrears with their payments. The company has set up a dedicated advice line and, provided problem customers use this facility, Barclaycard has promised not to chase those in arrears for at least two months.

This is the first sign of cracks in the UK credit card industry which has been unbelievably quiet over the last few months. Slowly but surely, even though UK base rates have fallen, we have seen credit card interest rates continue to rise heaping more and more pressure on the UK consumer. Whether this move by Barclaycard will be followed by any competitors remains to be seen but finally there would be seem to be some light at the end of the tunnel for troubled credit cardholders.

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