It has been revealed that in excess of 5 million homeowners in the UK are currently paying at least one of their regular household bills using their credit cards. This is a worrying development as the UK financial crisis continues to roll on and a full blown recovery in the UK economy seems further and further away. It looks as though more and more people are storing up more and more problems for themselves and in the future we could see an increase in bankruptcies and debt management arrangements.
The UK government has pledged to give new powers to the likes of the Office of Fair Trading in relation to so-called excessive credit card interest rates. However, while many people have welcomed the move by the government do we really need help in controlling our credit card spending?
The UK government has today announced wide sweeping reforms of the UK finance arena to end what it describes as "unfair bank charges" and "excessive interest rates on credit cards". Thankfully the government has given the Office of Fair Trading and other regulators increased powers to ban excessive charges on credit cards as well as unfair bank charges.
In January 2009 we saw a number of new 0% transfer deals in the UK credit card market with the average lasting between 15 months and 16 months. As a consequence many people in the UK will now be coming to terms with the end of their 0% transfer deal and face the prospect of significant interest on their remaining balances. However, help may be at hand!
There are signs of improvement in the UK credit card market with competition beginning to intensify. Recently we saw the introduction of a Virgin Money credit card deal offering 0% on transfers for 14 months but this has now been superseded. Both Clydesdale Bank and Yorkshire Bank, part of National Australia Bank, have today announced 0% transfer deals for 16 months and 0% interest on all purchases for the first three months.
As the ongoing expansion of Sainsbury's continues, after a difficult few years, the company has announced a new deal on its own credit card. Those who use the Sainsbury's credit card will receive double Nectar points in-store, online and in petrol stations for two years. The company hopes that the offer will see a significant increase in the 500,000 people already signed up for its credit card and instil further customer loyalty.
In a move which has apparently been on the cards for some time, MBNA is set to phase out credit card cheques ahead of a government ban when the Financial Services Bill comes into force next year. While credit card cheques have proved useful to some customers, many promotional credit card cheques have tempted new customers to spend money which perhaps was beyond their means.
While the credit card industry continues to suffer from bad debts and reduce consumer spending, Barclaycard has today revealed a new reward scheme for its credit card holders. The scheme is more widespread than any other available today taking in 30,000 retailers in the UK including names such as Shell, Pizza Express and Flight Centre.
Yesterday's announcement that the UK government is set to issue a raft of proposals for the UK credit card industry to effectively protect consumers has been well received across the board. However, there is growing concern that the proposals are nothing but "lip service" at this moment in time as we approach the next general election.
In a move which is purely and simply designed to grab the headlines Gordon Brown has today come out in favour of UK consumers who are drowning under the ever rising tide of credit card debt. He has promised to clamp down on credit card companies pushing ahead with further credit card interest rate rises and indeed there are plans to give UK credit card customers the statutory right to reject credit card interest rate rises and continue to pay off their existing debt at current rates.
