Credit Card Cheques Branded A Rip-Off By Financial Protection Agencies.
Below is a MRR and PLR article in category Finance -> subcategory Credit.
Credit Card Cheques Deemed a Rip-Off by Financial Protection Agencies
Summary
The Office of Fair Trading (OFT) is pushing for legal reforms to restrict credit card cheques. These cheques, around for a decade, let users transfer funds or make payments from their credit card accounts without using the card itself. However, they face criticism from financial watchdogs and the public for several reasons.Article Body
The Office of Fair Trading has demanded legal changes to limit credit card cheque usage. These cheques, in use for about ten years, allow transfers or payments without the physical card. Despite this convenience, they are criticized and disliked by both financial experts and consumers.Richard Brown, CEO of Moneynet, a credit card comparison site, previously warned against them: "We have always advised consumers to avoid credit card cheques like the plague. Many people have no idea about the extra charges, and they don't work like your usual credit card. It's unethical and irresponsible."
Consumer group Which? praised the OFT's stance, emphasizing that unsolicited credit card cheques are often sent to cardholders without their consent. Mike Naylor of Which? stated, "We want unsolicited credit card cheques banned, especially since companies use them to push indebtedness, suggesting they pay for holidays or gifts."
Brown added, "As bills pile up, many might be tempted to use these cheques, but it's an expensive choice. At four times the base rate, consumers should reconsider. Plus, you lose the long interest-free periods available on regular credit card spending."
The financial information site Motley Fool noted that using these cheques sacrifices the buyer protection offered by standard credit cards, which cover items valued between £100 and £30,000.
Many users are unaware that interest starts accruing immediately and is higher than standard credit card rates. The OFT concurs with Which? on changing the law, suggesting cheques only be sent with explicit consent.
Steps are being taken to address the issue. A Department of Trade and Industry discussion paper highlighted a Treasury Select Committee's recommendation to end unsolicited credit card cheques, only issuing them upon customer request.
The Association of Payment Clearing Services (Apacs), representing the credit card industry, mentioned that lenders are working on solutions. Apacs spokeswoman Sandra Quinn noted, "The new banking code demands more transparency about charges. The OFT's research predates this initiative. The industry disagrees with the OFT's proposal that consumers actively opt-in for credit card cheques."
Disclaimer
This article is for informational purposes only and should not be taken as advice under the Financial Services Act 1986. Seek professional advice before entering into any contracts.Useful Resources
- [Credit card comparisons - Moneynet](http://www.moneynet.co.uk/credit-card/credit-card.shtml)- [Financial information site - Motley Fool](http://www.fool.co.uk/decisioncentre/creditcards/transfers.aspx)
You can find the original non-AI version of this article here: Credit Card Cheques Branded A Rip-Off By Financial Protection Agencies..
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