This week the credit card industry and the government agreed on five new measures to help protect consumers from getting into large amounts of debt. We hope our brief guide to the measures agreed, which are due to come into effect by end of January 2011 at the latest, will help you make sense of what’s going on.

The measures agreed are:

1.    Giving credit card holders 60 days to reject changes to the interest rate being charged on their existing debt. If the rate change is rejected, the customer must close their account and the existing lender must give the customer a reasonable period of time to either clear the debt or move it to another lender

2.    Customers will have a 30-day window to opt out of any pre-agreed increases to their credit limit

3.    A rule which says that monthly repayments should at least cover interest, fees and charges, plus 1% of amount spent

4.    The payment hierarchy, or the order in which payments are applied to debts with different interest rates on your credit card, has now been set so that debts with higher interest rates are paid off before debts with lower interest rates. In the past, there was no set rule for the how payments should be applied towards debts with different interest rates and all credit card providers, with the exception of Nationwide, chose to put credit card payments towards the cheapest debt first – a so-called ‘negative-payment hierarchy’.

5.    A ban will be introduced so that unsolicited increases to credit limits for those in financial difficulties cannot be made.

More information about these changes can be found in the following news articles:

17/03/2010 – New credit card laws ’should just be the start’
18/03/2010 – Credit card regulations ‘do not go far enough’
19/03/2010 – Credit Card industry overhaul approved
19/03/2010 – Reactions to the government’s new credit card rules

Tip: Bookmark this page and remember to keep checking back because we will add more articles to this list as the story develops