Mike Penning (Hemel Hempstead) (Con): The industry has a wide knowledge of people's credit. One area that is very dangerous is the transfer of credit card balances to new credit cards. There are some wonderful offers out there, but the problem is that the credit card companies know that a balance is being transferred to a new card, with a whole new credit limit, yet the existing credit card is not cancelled. So the borrower automatically gets double the amount of credit, and they can do that every six months. There is not one credit card company that cancels the card from which the balance is being transferred. Its credit limit remains in place. If someone with a £5,000 credit limit transfers that balance to a new card, they will find themselves with a combined credit limit of £10,000. They can do the same thing six months later. The danger is that the credit card companies have the information, but they are not using it to protect the consumer. For full debate as reported in Hansard, click here. |
