The government, in attempt to shut the stable door long after the horse has bolted, has come up with some proposals theoretically designed to force credit card companies to help customers reduce their debt.
Card companies will be forced to allow customers to pay off their most expensive debts first, rather than pay off the cheaper debts and allow charges to accrue for higher interest debt.
The minimum monthly repayment level would also be increased, to encourage people to pay off their debt faster.
The government said:
"Around one-third of people who don't pay off their credit card bill in full each month make only the minimum repayment. This can mean consumers take decades to pay off the debt."
Indeed so, but this is most likely due to the fact that they cannot afford to pay off much more than the minimum.
By forcing those already in debt to pay a greater amount, the government is in danger of pushing many hard pressed families over the "financial edge".
The government also proposes to ban the practice of credit card companies automatically increasing credit limits, without specific authorisation from their customers.
Will they also ban card companies from arbitrarily cutting credit limits on those card holders with good credit records, who clear their debts each month?
The government also wants tighter rules imposed on increasing the interest rate on existing debt without "proper explanation".
That will not make not one jot of difference to this rip off practices employed by card companies. They will continue to increase rates based on the "explanation" that they are finding their margins squeezed by "difficult trading conditions".
Until there is a thorough independent investigation of the make up/rationale of companies' charges, and the quasi "price fixing" scheme of arrangement wrt this practice operated by the companies, they will continue to charge what they like, because they know that they can get away with it.
The proposals are open to consultation until January 19 2010.
This particular horse has long since bolted and the British consumer is hopelessly mired in debt, these proposals are little more than a "gnat's piss" on the dung heap of debt that has been created by the Faustian collusion between greedy consumers and lenders.