Credit cardholders in the United Kingdom have been adjusting to the newly implemented set of credit card rules by the Financial Conduct Authority (FCA). Mirror reported that failure to comply with the regulations can result in the suspension and closing of many accounts.
An FCA spokesperson cited by The Guardian said that the set of regulations was created in order to aid individuals with “persistent debt” for at least 36 months. This move will “let them know what actions they need to take to get themselves out of persistent debt over the coming months.”
Back in September 2018, banks were ordered to determine customers who fall under the at-risk category. These customers were given 18 months to decrease their capital sum debt instead of paying in terms of minimum interests.
This move is expected by many to reduce the revenues of credit card companies. However, the FCA noted that this will help customers up to £1.3 billion annually.
Customers who were given such notice are expected to comply before February this year. Those who fail to do so will face suspension of their credit card accounts. In turn, this could potentially have a negative impact on their credit ratings.
Myles Fitt, Citizens Advice Scotland’s financial health spokesman, acknowledged that this move can help some customers pay their debts. However, Fitt noted that this can negatively affect individuals with insecure incomes and are compelled to continually use borrowed money for everyday living.
According to Fitt, this development “could be a real problem” for customers who fail to arrive at an agreement with their card company. As a result, this can lead to a spike in the demand for help in paying off debts.
FCA estimates show that there are 5.6 million accounts owned by financially challenged individuals.