High-interest credit card sparks outcry

    Debt charities have called for a cap on lending rates after the
    launch of a credit card aimed at low-income families that charges
    interest at rates of up to 70 per cent.

    Debt On Our Doorstep, an umbrella group that includes Oxfam and
    Church Action on Poverty, has described the Vanquis credit card as
    a “disgrace” and called for an interest rate ceiling of 30 per cent
    for all cards.

    It has launched a Curb the Credit Sharks campaign with the Sunday
    Mirror, and is urging people to raise the capping issue with their
    MPs before the Consumer Credit Bill returns to parliament next
    week.

    The new card, issued by Provident Financial, typically offers an
    APR interest rate of 49.9 per cent. But for customers judged to be
    high risk, this will rise to 69.5 per cent.

    Provident Financial said the cards were for people who might have
    had financial problems in the past or had modest incomes and that
    their rates had to reflect this. Rates of interest would be
    reviewed after 12 months.

    But the Joseph Rowntree Foundation warned that tackling high-cost
    lending could reduce access to credit for poorer people. It has
    called on the government to invest in discretionary interest-free
    loans through the social fund and provide more support for credit
    unions.

    • Affordable Credit: The Way Forward at www.jrf.org.uk

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