Wednesday 20th of January 2010
There are 30.2 million credit card holders in the UK, new figures show, many of whom may need to ask individual voluntary arrangement (IVA) questions if they are struggling to keep up with repayments.
In response to government proposals to help credit card users stay on top of what they owe, the UK Cards Association suggests that borrowers who only repay the minimum amount every time they get a bill are contacted by lenders and advised of the negatives of such a method.
Only repaying as little as possible could see interest rapidly accumulate, sending credit card debt out of control.
An IVA can freeze the interest rates on credit cards, which could take some of the pressure off those people who are trying to clear their balances.
The organisation also wants lenders to put borrowers’ cash towards the biggest debt first to prevent balances climbing higher.
Another benefit of an IVA is that it merges all credit card debt into one, monthly repayment, which could negate concerns of larger balances being left in the cold by lenders.
"Our approach will deliver big improvements to customers without smothering competition and choice, which customers value and gain significant benefit from," explains Melanie Johnson, chair of the UK Cards Association.
By Chris King
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- IVA help could support Brits juggling credit card payments
