uSwitch.com: Credit card bosses and Business Secretary

In light of today's Whitehall summit between credit card bosses and Business Secretary, Lord Mandelson, to discuss whether firms should cut interest rates, Louise Bond, Personal Finance Expert at uSwitch.com comments: "Finally the government is sitting up and taking notice of money making initiatives inflicted on consumers by credit card providers. In the last month alone two big players in the credit card market have been guilty of increasing standard purchase APR's, with HBOS Plus Mastercard rates rising from 15.9% to 16.9% (tier one) and from 17.9% to 18.9% (tier two), and the standard purchase APR for Abbey's Mastercard/Visa credit card offering has inflated from 15.9% to 18.9%.

"Whilst any attempt to clamp down on extortionate APR's which now stand at an average of 17.03%, up from 16.4% in the last year alone, is a positive move, they are, however, just the tip of the iceberg and looking at them in isolation is no solution. If today's meeting results in providers being compelled to put an end to this culture of continuous rate increase, then they will simply seek to recoup their losses elsewhere through other fees and charges.

"There has been much recent evidence of just how providers introduce revenue-boosting small print tweaks at the expense of the consumer, and the 0% balance transfer market has been a particular vehicle in this respect. In an attempt to redress the costly headache of savvy rate tarts, providers have implemented steady increases in BT fees which currently generate close to £412 million worth of revenue.

"Just this week, HBOS increased its BT fee from 3% to 3.5% (equating to an extra £9.34 on the average balance transfer), and, particularly in the current climate, the last thing consumers need in their attempts to find a better deal is to be penalised with increased switching fees. However, there is also the argument that increasing BT fees is preferable to providers completely withdrawing these types of products altogether. The market has seen big name providers such as Capital One, RBS and NatWest do just that in recent weeks, and fee increases may be the only way for providers to be able to afford to offer these deals and keep the BT market alive.

"We hope that today's meeting is a signal to the credit card industry that the government means business, and that unfair tactics imposed on borrowers will no longer be tolerated. uSwitch.com also calls for this initial step focussing on interest rates to be extended to a holistic review of the credit card market to stamp out all cynical revenue-boosting practices once and for all."