Newspaper article The Journal (Newcastle, England)

Put Cap on Interest Rates, Demands MP

Newspaper article The Journal (Newcastle, England)

Put Cap on Interest Rates, Demands MP

Article excerpt

Byline: By Zoe Hughes

Stores should be banned from charging excessive interest rates on their charge cards after competition chiefs ruled `wealth warnings' were needed on statements to protect customers from running up too much debt, an MP has urged.

Newcastle Central MP Jim Cousins yesterday hit out at the practice of many popular stores to charge up to 30% on debt run up on customer cards ( insisting it was time to cap the interest levels.

His call followed a ruling by the Competition Commission last night that stores charging more than 25% on their cards had to tell customers they could get credit cheaper elsewhere ( and set out in detail the consequences of not paying off their debts in full.

Britain's debt liability has already broken through the pounds 1 trillion mark. However, Mr Cousins ( a member of the Commons Treasury Committee which has campaigned for action ( said more needed to be done to clamp down on the excessive levels of store card interest, with cards often `sold' to customers with the promise of hefty discounts. "These cards are very easy to take out with people told you'll get 10% or 20% off if you take the card out now. That's why we need a cap on interest charges," he said. "The Commission has taken the first step in this battle but more does need to be done.

"The banks should also play a role in this by putting far more money into financial advice centres for those who do get into debt." The MP was joined by campaigners Credit Action, who also called for more debt education in schools, as well as the need for retail groups and banks to share information on who was claiming credit.

"Credit is here to stay whether we like it or not, so we have to teach people to use it properly. The people we have seen this year have average debts of about pounds 30,000. That's a huge amount and, when it's on store cards, you really are borrowing a lot more than what you get back in discounts," said Mr Cousins.

The Government has already come under growing pressure to act following the deaths of Dereck Rawson, 51, of Cambridgeshire, and Richard Cullen, 65, of Wiltshire, who both took their lives after they ran up credit card debts of more than pounds 100,000. …

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