New Government Reforms on Credit Cards

By [http://ezinearticles.com/?expert=Peter_I_Robinson]Peter I Robinson

David Cameron's new coalition Government is planning tough new legislation for the credit card industry on unfair charges. UK consumers have heard this before of course, but there's a new twist in the story.

Tighter regulations for credit and store card issuers was on the election manifesto of all the major parties, and had been discussed by the previous Government. However, the financial meltdown and the nationalisation of many banks mean credit card companies are now faced with direct competition from Government controlled banks as well as legislationary pressure to give consumers a far better deal.

The arrival of independent websites which allow consumers to compare credit cards easily online also creates a more open market, putting further pressure on unfair charges.

Marc Gander from Consumer Action Group, a strident campaigner on bank charges, gave a cautious 'thumbs up' to the Governments plans, but said announcements so far were short on detail.

Marc said "It [the government] doesn't define 'unfair' or say what protections will be granted overall".

In a shrewd move UK card issuer MBNA Bank has seen the writing on the wall and acted ahead of the legislation by changing the way customers payments are allocated to their accounts.

MBNA which has over 6 million UK customers has announced that from 1st September 2010 it will allocate incoming payments from customers towards paying off the highest interest charges on their accounts first. Customers should be notified of the changes formally any day.

In March this year, the card industry announced a series of gentle steps to improve the lot and the rights of customers in a bid to ward off harsher regulation when the Government finally gets round to looking more closely at the industry's charges.

The industry's planned changes are rumoured to be likely to cost �533 m over the first 2 years, doubling the cost of the package of proposals put forward by the industry in January 2010. The proposals were based on the analysis of 44 million customer accounts covering cardholder behaviour over the last 2 years.

The author Peter Robinson, is a writer about personal finance and he specialises in credit cards. Peter runs a news feed and independent credit card information website called Cardchoices where you can [http://www.cardchoices.co.uk/compare-credit-cards/]compare credit cards and apply online for instant approval.

On Peter's site you can review the best [http://www.cardchoices.co.uk/compare-credit-cards/overseas-credit-cards/]Overseas Credit Cards that have reduced charges for overseas transactions.

Article Source: [http://EzineArticles.com/?New-Government-Reforms-on-Credit-Cards&id=4440422] New Government Reforms on Credit Cards