Article Categories
» Arts & Entertainment
» Automotive
» Business
» Careers & Jobs
» Education & Reference
» Finance
» Food & Drink
» Health & Fitness
» Home & Family
» Internet & Online Businesses
» Miscellaneous
» Self Improvement
» Shopping
» Society & News
» Sports & Recreation
» Technology
» Travel & Leisure
» Writing & Speaking

  Listed Article

  Category: Articles » Finance » Credit » Article
 

Credit Card Cheques branded a "rip-off" by financial protection agencies.




By Richard Green

The Office of Fair Trading has issued a demand for a change in the law restricting the use of credit card cheques. These cheques have been around for about 10 years and are designed to allow people to transfer funds into another of the cardholder's accounts or make payments using their credit card accounts without the use of the card itself. They have however come under fire for a variety of reasons and are widely disliked by both financial watchdogs and the public alike.

Last year, Richard Brown the chief executive of credit card comparison site Moneynet.co.uk, warned, "We have always advised consumers to avoid credit card cheques like the plague. Many people have no idea that these cheques carry extra charges and do not work like the credit card in their wallet. It's unethical and irresponsible."

Which? has welcomed the comments from the OFT which called credit card cheques a rip-off. Which? is particularly critical of the widespread industry practice of sending out unsolicited credit card cheques in the post whether they are wanted by cardholders or not.

Mike Naylor of Which? said, "We want unsolicited credit card cheques to be banned, especially as we have found that companies use them to encourage indebtedness, for example cheques have been sent out with marketing literature suggesting they can be used to pay for holidays or gifts."

Richard Brown stated, "Many people will be feeling the pinch as all the bills start to roll in, and will be tempted to use these cheques - but they could find it an expensive option," he also added, "At four times the base rate, consumers may want to think twice before using these cheques. And don't forget, users also forfeit the benefit of the lengthy interest free periods available on standard credit card spending."

Financial information site - Motley Fool, pointed out that, "You also don't get the same degree of protection as you do when you use the actual credit card where card providers are equally liable for a breach of contract by the supplier in respect of items worth between £100 and £30,000."

Many users do not know that interest starts to be accrued straight away, according to recent research, and many people are unaware that the interest rate is higher than the standard charges for using their credit card in the conventional manner.

The OFT agrees with Which? in calling for the law to be changed and suggests that the cheques should not be sent out without the card holder's explicit consent.

Action does appear to be starting on this issue however. In November a Department of Trade and Industry discussion paper noted that a "Treasury Select Committee recommended an end to the unsolicited issuing of credit card cheques so that they would not be issued unless the customer specifically requested the cheques."

The Association of Payment Clearing Services (Apacs) who represent the credit card industry told BBC News that the lenders were already in the process of putting their own house in order.

Apacs spokeswoman Sandra Quinn said, "The new banking code requires lenders to be more transparent about charges, the OFT research pre-dates this initiative," and that, "the only area that the industry disagrees with what the OFT says is over its proposal that consumers should have to actively sign an opt-in if they want to receive credit card cheques".

Disclaimer:
All information contained in this article, is for general information purposes only and should not be construed as advice under the Financial Services Act 1986.
You are strongly advised to take appropriate professional and legal advice before entering into any binding contracts.

Useful resources:
credit card comparison site Moneynet.co.uk
Financial information site - Motley Fool
 
 
About the Author
Richard lives in Edinburgh, occasionally writing for the personal finance blog - Cashzilla, and talks to himself a lot.

Article Source: http://www.simplysearch4it.com/article/22855.html
 
If you wish to add the above article to your website or newsletters then please include the "Article Source: http://www.simplysearch4it.com/article/22855.html" as shown above and make it hyperlinked.



  Some other articles by Richard Green
Arizona's Biltmore Fashion Park: "this place is hot"!
The Biltmore Fashion Park, located just outside Phoenix, boasts a variety of exciting cafés and restaurants; so when you're browsing its numerous retail ...

Underground Atlanta: successfully mixing history with a modern retail experience
Atlanta, Georgia, is one the Deep South's most important and most interesting, cities. Its origins lie in the extension of industry ...

The invoice finance sector is showing positive growth according to the latest figures from the Factors and Discounters Association.
According to the latest figures from the Factors and Discounters Association (FDA), the invoice finance sector of the UK Asset and ...

Take a weekend theatre break in Britain
The number of weekend breaks people take in today's modern world has increased considerably over the last ten years. Instead of spending weekends at home, young, ...

Why you should always use the correct motor oil in your car
Motor oil, coolant, clutch, transmission, power steering, and brake fluids are all vital parts of all cars. They need to be regularly checked, topped up or ...

Canon introduces All-in-One colour toner cartridges.
With the release of the new Lasershot LBP-5000, Canon have introduced their first colour toner printer to feature all-in-one cartridges. We compare this new concept colour toner printer with two ...

  
  Recent Articles
Debt Collection Agencies : Understanding a growth industry
by Martin McAllister

Five General Financial Habits That Can Raise Your Credit Score
by Dulce Azogue

Why Your Credit Score Is More Important Than You Realize
by Dulce Azogue

How To Start Fixing Your Credit Repair Ratings
by Tony Pescatore

Cheap Credit Card: Make It Possible…With Ease
by Josephine Wingfield

Violent Crime On Innocent Victims…Adds To The Victim's Woes…With Mountains Of Unpaid Medical Bills and Bad Credit
by Dale Rogers

How To Eliminate Credit Card Debt
by Tony Pescatore

Bad Credit Is No Longer A Taboo In Loan Market
by Turk Malloy

Poor Credit Does Not Debar You From Getting Secured Loan
by Aldrich Chappel

Credit Card Debt Management Gives Better Solution of Debts
by Ann Gibson

Bank On Your Future And Purchase The Car Of Your Dreams
by Christine Macguire

Business credit card: A new dimension for financing business
by Josephine Wingfield

Can't connect to database