It’s time to crack down on high-cost credit cards, says Labour MP

Stella Creasy is hoping to crack down on high-cost credit cards, introducing a cap on fees and interest charges.

The Labour MP, who was credited with the caps on interest rates and fees charged by payday loan companies, will attempt to enforce similar laws for credit cards on in Parliament on Tuesday.

“It makes no sense to recognise the value of protecting those using payday loans from getting stuck in a spiral of debt but not those using credit cards,” she said.

The new efforts to tackle credit card debt come after new research from the New Economics Foundation said credit card debt is now becoming as unmanageable as payday loans had previously been.

Since the 2008 financial crisis, consumer borrowing on credit cards has increased at record levels.

Creasy’s efforts have been backed by Welsh actor, Michael Sheen, who recently began a campaign against high-interest credit providers.

The FCA has ruled out capping credit card costs after reviewing the market last year.

“We decided that the revolving nature of credit card debt made it difficult for a cap to work, unlike fixed-sum high-cost short-term credit,” said a spokesperson for the watchdog.

Debt is a big problem in the UK. There are now 8.3 million people in the UK with problem debts, according to the Money Advice Service.

Andrew Bailey, chief executive of the Financial Conduct Authority, said: “I don’t think we have a sustainable solution, in terms of the provision of credit where needed. No one body might solve it on their own.”

Regarding payday lenders, the FCA cracked down from 2015 where they capped the rate of interest. 

“Anyone who gets into difficulty and is unable to pay back on time, will not see the interest and fees on their loan spiral out of control – no consumer will ever owe more than double the original loan amount,” said Martin Wheatley, chief executive of the FCA.