Page last updated at 00:01 GMT, Tuesday, 30 December 2008

Credit card rates 'must not rise'

Credit card
The FSB said its proposal would also help consumers

Credit card interest rate charges should be capped to help smaller firms cope with the downturn, an industry body has said.

In its New Year message the Federation of Small Businesses (FSB) said with the a base rate at 2%, the Chancellor and Bank of England must consider the move.

It said the move would "cut business costs but give consumers a real boost and cut the cost of borrowing".

It comes after credit card firms agreed to a set of "fair principles".

Existing rate

The principles, agreed in mid-December, should see card providers back off from raising interest rates when customers fall into arrears on payments.

The agreement came after card firms faced pressure from the government to give more help to struggling customers.

Measures include an option for customers to transfer deals, or freeze the account and pay off debts at the existing interest rate if the card company suddenly wants to raise its Annual Percentage Rate (APR).

The government wanted to tackle risk-based pricing, when card firms took swift decisions to raise the interest charged based on the risk of people defaulting on their borrowing.

'Year of action'

Meanwhile in the New Year message, the FSB's chairman John Wright also called for a limit on the "tide" of regulations - which he said were "drowning" small firms.

"2009 must be a year of action for small businesses," he added.

"The small business sector is the sector to see the UK out of the recession.

"Small businesses are innovative, enterprising and flexible, but an increase in late payments, a decline in trade and poor access to finance will leave thousands facing closure in 2009."

Print Sponsor

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Sign in

BBC navigation

Copyright © 2019 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific