FCA Rules May Result in UK Credit Card Suspensions From February 2020

January 6, 2020
FCA Rules May Result in UK Credit Card Suspensions From February 2020 January 6, 2020 Clive Nelson https://plus.google.com/110107075468979879828/
Financial Conduct Authority

The UK’s Financial Conduct Authority (FCA) asked banks in September 2018 to look at their current credit card customers and identify those that have only been paying minimum interest payments.

This was to help those who are struggling with persistent credit card debt. Once done, the identified customers were then given 18 months to start bringing down the capital they owed.

The deadline was set to February 2020 and those who still have high amounts pending will have their credit cards suspended.

The key objective of the new rules is to wean off people from depending on debt so that they can get on a dedicated repayment plan. However, some experts point out that this move might backfire.

Many people are living constantly on borrowed money because of fluctuating incomes.

Myles Fitt, the financial health spokesman of Citizens Advice Scotland said that the proposed changes will help a small percentage of this demographic to pay off their debt but it will have a negative impact on most of this demographic as they have insecure incomes and depend heavily on their credit cards. Taking it away from this will put them at a disadvantage and increase their debt demands.

Through most of 2018, most of the major credit card providers in the UK have been contacting customers who have not been making a dent in their credit card debt. They were then warned to increase their payments so that they can fully pay off their debt.

Many of these debtors have been mainly paying off the minimum so that they can borrow money regularly. But the FCA has become increasingly concerned about people who have paid more in interest fees than their entire debt. This is why they laid down the law in 2018. The banks should have sent at least three warning letters by now about the regulations.

High Debt Across the Country

According to the FCA, there are 5.6 million credit cardholders in the UK who are living a hard-scrabble existence. The regulations are aimed at cutting down this amount, ensuring that they don’t have the burden of credit card debt on top of their financial worries.

Besides cutting their credit cards off, UK banks are supposed to offer repayment schemes that will last over three to four years. Some suggestions include transferring the credit card balance to a personal loan with a lower interest rate.

About the Author

Clive Nelson

Clive Nelson Author

Hi, my name is Clive Nelson and welcome to Traders Bible. Just to tell you bit about myself…I have been trading FX and binary options for the best part of 10 years now. After graduating with honours in economics, I began working for an investment bank in New York as an assistant trader before working my way up. After a few years, I went on to work as a broker in London, England and then eventually came back to the U.S to work in a hedge fund, where I manage $800 million of my clients’ investments. There have been times over the course of my career where I’ve had to take a hit, but I’ve accepted that losing is part of the game, it’s a learning curve. I’ve learnt from my mistakes and you don’t have to make the same errors I did. A lot of my education came from when I was a broker and this is why I’m here to tell you that Traders’ Bible offers you the foundations of how to become a great trader.

Related Articles

Switzerland’s Loss Of EU Access Rights Causes Trading Costs To Increase

Though Switzerland is technically in the European Union (EU), the country is banned from trading many shares in the bloc

UKJT Looks To Clear Up Confusion On Cryptoassets

One of the problems that most governments around the world have with cryptocurrencies and related assets is that they are

IMF Slashes Global Growth Outlook On Policy Uncertainty, Trade Tensions

On Tuesday, the International Monetary Fund trimmed this year’s global economic growth prediction by mentioning commercial conflicts, weaker business confidence,