- Friday, 16 April 2010The Liberal Democrats' proposals to cap credit and store card rates have been criticised as they could lead to more people requiring
debt management if introduced in the UK.
According to Fiona Hoyle, who is head of consumer finance at the Financial and Leasing Authority (FLA), setting a maximum interest rate on cards could lead to helpless people using loan sharks, something that would likely result in larger debts.
In response to the Lib Dem's suggestions that was outlined in the party's manifesto on April 13th, Ms Hoyle said: "Interest rate caps do not work and could lead more people into debt."
She added that consumers will pay more if interest rates are set too high but lenders will be forced to exit the market if the limit is too low.
The FLA is the leading trade association for store and credit card providers, and provides services relating to secured and unsecured loans.
On April 14th, data from Barclaycard Global Payment Acceptance revealed that credit and debit card spending was up 9.2 per cent in March 2010 in comparison to the same time last year, showing they are an increasingly popular method of payment.
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