Lower interest rates needed for spiralling credit card debts – Doherty
Fine Gael Press Office
Regina Doherty TD
Meath East
Thursday, December 1st 2011
Lower interest rates needed for spiralling credit card debts – Doherty
Fine Gael TD for Meath East, Regina Doherty, has said that a more flexible approach needs to be taken by the banks to help people burdened with large credit card debts. Deputy Doherty said the situation facing many people was stark, with a total of €3 billion owed on credit cards in this country.
“Thousands of people are trying in vain to clear their credit card, but getting on top of the debt mountain can be extremely difficult due to the high interest rates being charged. We’re not talking about huge debts here; plenty of people may have run up debts of between €5,000 and €10,000 on their credit cards during the boom, and many of those who are lucky enough to have hung onto their jobs have had their incomes significantly reduced. So how are they supposed to clear a credit card debt, when interest rates of up to 30% are being charged by some banks?
“I have been contacted by a member of the public who faces 20 years of repayments to clear €10,000 of credit card debt due to the penal rate of interest she is being charged. This is a scandalous situation.
“When burdened with this level of interest rates, consumers find the money they are paying off each month is only having an impact on the interest being charged, with minimal reduction on the overall debt. If you are in this cycle, it is very hard to get out of it. I think it’s time the banks took a much more flexible approach, by issuing personal loans at a more reasonable rate of interest to their customers, to allow them to repay their debts.
“This makes economic sense. With reduced monthly repayments, consumers would have more money to spend in the real economy. It wouldn’t require the banks to stump up any cash; this solution would simply involve them taking a more realistic approach by allowing their customers to repay their debts in a sustainable way.
“I have raised this issue with the Minister for Finance, Michael Noonan, and I intend to pursue this matter further. I would encourage the Minister to examine what powers lie within his office, or that of the Central Bank, to put pressure on our two pillar banks. Under the current code of conduct, lenders cannot make unsolicited contact with consumers in arrears on credit cards – but what about actually helping them to overcome these debts?”
ENDS
Contact:
Sarah Meade
Fine Gael Press Office 01 618 3379
