The government are planning many different possibilities to solve the problem of debt in England. One idea that they have would be to compel credit card firms to double the amount that their customers have to pay back. Minimum repayments that are now at 2% may be increased to 5% according to an announcement recently made by the Consumer Minister on behalf of the Government.
An example given was based on a customer borrowing only £1400 - paying this back at a rate of 2% would take about 40 years to repay, the customer would also be paying a huge amount of interest which would increase the total amount repayable to £4800 - about 3 times the amount originally borrowed.
In addition the government want businesses to use customer repayments to clear higher rates of debt before those at 0%. Also it is planned to stop the large credit card companies from raising credit limits without permission, which at the moment they are at liberty to do. Some companies re-price existing credit limits as well and the government want to act so that they can no longer do that.
Finally it has been seen that the marketing plans and procedures of some companies are designed so that they can attract customers into borrowing more money than they can afford. At present it is estimated that people in England owe £56 billion on credit and store cards.
A representative from the organization 'Moneyset' has said that these new proposed plans by the government will be a great help to customers who are borrowing, or are thinking about borrowing money, because at the moment many are having serious financial problems as they struggle to keep up the current repayments.
