Limit to be put on credit card APRs

The new government has announced that a limit will be put on the interest rates that businesses can charge customers on credit cards, the Daily Telegraph reports.

According to the government, it will appoint a regulator to determine what constitutes an excessive interest rate and ensure that such a rate will be outlawed.

As a result, any credit card charging more than 25 per cent may be banned, which could potentially lead to a handful of cards being scrapped from the UK market.

Vera Cottrell, the policy adviser on personal finance issues at Which?, told the publication: If you want to limit the damage done by excessive interest rates, you have to extend the limit to other forms of credit as well.

Banning high rates on store and credit cards does not solve the problem if consumers merely shift their borrowing onto another form of debt .

Meanwhile, Ruth Jackson, writing for Money Week, claimed recently that after a year of unattractive credit card deals, competition in the UK market is increasing once again.