In a very welcome move for credit card borrowers the industry has agreed with government to five new conditions that will reduce costs for borrowers by an estimated Â£533 million over the first two years.
Gordon Brown has seen through on his promise to end credit companies' sharp practices.
The new rules will come into force by the end of the year and it is understood that the government will only impose legislation if the card issuers do not stick to them.
Of the total household debt in Britain of £1,460 billion, £55 billion is on credit cards. But the number repaying the amount in full every month has increased from 55% to 61% in the last 3 years.
The five new rules are:
Where a card has different rates of interest, any payments made will pay off the most expensive (highest rate) first.
The minimum payment will always cover interest, charges and 1% of the principal capital.
Borrowers will be able to reject raised credit limits.
Customers will have the right to reject the card and move the loan before the interest rate is increased.
Card issuers will look at giving customers annual statements that allow them to compare lenders.
This is good news for the consumers that borrow. But the lenders are going to be squeezed by this so we may find them recouping the lost profit in some other way. This could include higher transfer fees or even monthly charges so that even those that repay in full pay something.
But at the end of the day as long as the rules are transparent and easy to understand then at least the consumer can make a considered decision.