Business Secretary Lord Mandelson is meeting credit card bosses to discuss whether the firms should cut their interest rates more.
Business Secretary Lord Mandelson has been meeting credit card bosses to discuss whether the firms should cut their interest rates more.
The meeting was organised by Prime Minister Gordon Brown after the government said it was concerned that card rates were not going down enough.
The meeting was organised by Prime Minister Gordon Brown after the government said it was concerned that card rates were not going down enough.
The government says the credit card firms should do more to follow the recent cuts in UK interest rates.
The government says the credit card firms should do more to follow the recent cuts in UK interest rates.
Credit card firms have always said their interest rates are competitive.
Credit card firms have always said their interest rates are competitive.
"The government is deeply concerned that borrowers aren't getting a fair deal," said Consumer Affairs Minister Gareth Thomas, who is also attending the meeting.
"The government is deeply concerned that borrowers aren't getting a fair deal," said Consumer Affairs Minister Gareth Thomas, who was also attending the meeting.
"That's why we've taken swift action to bring the industry in to look at how costs are being applied to people's existing debts."
"That's why we've taken swift action to bring the industry in to look at how costs are being applied to people's existing debts."
Concern
Concern
Mr Thomas told the BBC that there was particular concern over irresponsible behaviour by one or two credit card companies, giving an example of one doubling the APR on one customers' borrowing while they were in debt.
Mr Thomas told the BBC that there was particular concern over irresponsible behaviour by one or two credit card companies, giving an example of one doubling the APR on one customers' borrowing while they were in debt.
He said that two-thirds of people paid off their credit card bill at the end of every month and were effectively enjoying interest-free credit.
He said that two-thirds of people paid off their credit card bill at the end of every month and were effectively enjoying interest-free credit.
But he said that the summit would discuss assistance for those who got into trouble making repayments.
But he said that the summit would discuss assistance for those who got into trouble making repayments.
This could include a two-month window when people were not chased for debts if they were putting together a repayment plan with the help of independent debt advisers.
This could include a two-month window when people were not chased for debts if they were putting together a repayment plan with the help of independent debt advisers.
Any changes would be written into a voluntary code of practice.
Any changes would be written into a voluntary code of practice.
Different benchmark
Different benchmark
Steven Sklaroff, director general of the Finance and Leasing Association which represents the sector, is also attending the meeting.
Steven Sklaroff, director general of the Finance and Leasing Association which represents the sector, was also attending the meeting.
He said the rate at which card companies lend was set by inter-bank lending rates, which are higher than the Bank of England's Bank rate.
He said the rate at which card companies lend was set by inter-bank lending rates, which are higher than the Bank of England's Bank rate.
He also pointed out the difference between store cards and credit cards. Store cards have higher rates to reflect the greater risk and because they offer other benefits, he said.
He also pointed out the difference between store cards and credit cards. Store cards have higher rates to reflect the greater risk and because they offer other benefits, he said.
There are 31 million credit cardholders in the UK, according to the latest statistics from UK payments association Apacs.
There are 31 million credit cardholders in the UK, according to the latest statistics from UK payments association Apacs.
The Bank of England said that in the third quarter of the year £33.2bn was spent on credit cards, while £31bn of repayments were made.
The Bank of England said that in the third quarter of the year £33.2bn was spent on credit cards, while £31bn of repayments were made.
The average amount spent in a credit card transaction is about £65.
The average amount spent in a credit card transaction is about £65.
The average interest rate charged on a credit card has risen to 17.6% from 17.2% in May despite the falling Bank rate and a less dramatic recent fall in the cost of inter-bank lending, according to market analyst Defaqto.
The average interest rate charged on a credit card has risen to 17.6% from 17.2% in May despite the falling Bank rate and a less dramatic recent fall in the cost of inter-bank lending, according to market analyst Defaqto.
Research carried out by financial information group Moneyfacts showed that 10% of credit card providers had increased their interest rates since August.
Research carried out by financial information group Moneyfacts showed that 10% of credit card providers had increased their interest rates since August.
Are you having problems paying your credit card bills?
Are you having problems paying your credit card bills?
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