Complaints and Credit Cards

In the past year there have been an increasing number of complaints filed with the Financial Services Authority.  These complaints are coming in because of consumer unease about practices regarding their credit card companies.

At the beginning of the year it started with companies like Egg closing thousands of accounts saying the consumers were too much of a risk.  Other complaints at the time stated that credit limits were being dropped on consumer accounts without notification.  Those who complained were supposedly in good credit standing with the credit card companies and other lines of credit.  In fact many were paying down the balance on their cards or paying the balance off every month.  These complaints have increased speculation about the credit card issuer practices that have been going on for years.

The newest complaints are regarding rejection of applications.  Many consumers are being rejected for new credit cards for a variety of reasons that don’t seem to add up to the consumer credit report.  The FSA has decided to look into the complaints to ease consumer unrest.

Other complaints have been regarding default of payments.  Many consumers are worried that the credit card companies have raised their interest so high that they will begin to have credit card debt issues such as late or missed payments as a result. 
A study is showing that in 2006 the number of complaints were 2,731.  In 2007 this number of complaints increased to 14,123.  The amount is more than triple the complaints of a year ago, and the numbers keep increasing.

Worry now is that the credit card rates are going to jump another 5 percent by the end of 2008.  With rates already at 15.9 percent to 18.9 percent this increase in rates could very well bankrupt a lot of the consumers holding cards at the moment.  The concerns are growing and it seems the FSA is taking notice.

What they will be able to do is yet to be determined.  Many credit card companies have stated that they are raising rates in direct reflection of the billions in refunds they are ordered to give consumers regarding the overcharging of late fee payments.  Earlier this year the High Court sided with the FSA and OFT regarding the 35 pounds being charged on late payments.  The companies were ordered to refund money to those who were unfairly charged if they sought the refunds.

The credit cards still feel that the charges were justified and the loss of income from these refunds will affect them too much, thus the increase in the credit card interest rates.  The rates have been moving up steadily since the 2006 complaints caused the OFT to restrict all late fees to 12 pounds.

Adding in the credit crunch to the economic situation the debts on credit cards are rising for consumers.  The possible five percent increase could have many defaulting on their credit cards and other loans in an attempt to pay the debts.  The FSA and OFT may try again to place further regulations on the companies.