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Credit card holders given new rights

The government has announced a shake-up of the credit card industry that it claims will save consumers millions of pounds.

Five new 'rights' have been secured in an agreement between the government and the industry, which will save consumers almost £300m a year, according to government estimates.

Under the deal, repayments to credit and store card firms must be used to pay off the most expensive debt first, reversing the current practice.

Consumers will have the right to tell their providers never to increase their credit limit, and the right to reduce their limit at any time.

Lenders will not be allowed to raise interest charges on existing loans for customers without giving customers 60 days to switch provider.

Consumers will have an annual statement that allows easy cost comparison with other providers.

In addition, consumers at risk of financial difficulties will be given guidance on the consequences of paying back too little.

Prime Minister Gordon Brown said in a statement: "These new rights will put an end to the irresponsible lending practices that people have been most concerned about, and help cut the cost of borrowing."

The industry will introduce the key changes by the end of this year, the government says.

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