The changes to credit card regulations in the UK

Millions of credit card customers of the Royal Bank of Scotland group, which also includes NatWest, have been sent new warnings that their cards could be cut off if they fail to maintain the payments on their accounts properly. According to letters that are being sent out to the customers, the company’s new terms and conditions give them the right to “freeze spending”.

The bank says the changes to their terms and conditions are designed to help customers and protect them from the stress of long term debt. They’re also in line with newly introduced rules by the FCA to help individuals who find themselves in “persistent debt”. However, some customers fear that the strict new terms could do nothing but add to their financial worries.

One of RBS’s customers said: “The wording on the pamphlet is designed to read as though the bank is helping me, the customer. But it rang serious alarm bells as I considered the implications of what I can only describe as a ‘threat’… RBS appears to be saying that those of us who have used the 0% balance transfers and who are either paying the minimum, or even a higher amount, will now be penalised.”

But, in a statement from the bank, they argue that: “We want to help customers pay off their debts and the changes will help us to be able to do that” According to the new terms and conditions, if a customer pays more in interest and charged than other amounts they owe over two consecutive 18 month periods, they” may freeze spending on your card account”. It adds that this is “to help you focus on starting to reduce your outstanding debt”.

It’s also believed to be likely that other credit cards companies and banks will go on to follow RBS and introduce similar measures. The new FCA rules were introduced earlier in the year. Although they won’t fully come into effect until September, they are meant to help the growing number of consumers who find themselves in a long term cycle of debt. The regular says that around 3 million people in the UK are in persistent debt and changes need to be made to protect consumers financially.