StepChange publishes report on subprime credit and debt problem
Industry News | 09/07/19
Around four million people have a subprime credit card (defined as cards with an interest rate APR of 30-70%).
New research published by StepChange Debt Charity finds a strong association between subprime cards and problem debt – with three quarters (79%) of the charity’s clients with a subprime card saying it had a detrimental effect on their financial situation. This is at least partly attributable to the way firms market and operate the cards.
StepChange identifies targeted actions that the Financial Conduct Authority needs to take on subprime card practices – such as setting higher compulsory initial minimum payments on new cards, strengthening affordability assessment requirements, and banning unsolicited increases in credit limits – to reduce the likelihood of people getting unnecessarily caught in an expensive debt spiral.
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