PM vows to stop credit firms hiking interest rates

The Prime Minister said companies would be banned from imposing rate increases as part of a crackdown on "sharp practices".

The package of measures unveiled today will also include new rules designed to prevent irresponsible lending.

In his weekly podcast, Mr Brown said the bad habits of some banks and credit card firms were putting "extra pressure on you and your household budgets just at a time when finances are tight for many".

"We want not only to empower and protect you, as consumers, but also to make banks and credit card companies behave responsibly and act fairly.

"And so we will rewrite the rules on lending to end the sharp practices which sting so many credit card holders."

Mr Brown said the industry had agreed that repayments would now always go to the credit card with the highest interest first – rather than the cheapest as has often been the case.

That could help put "hundreds of millions of pounds a year back into your pockets and purses", he insisted.

"We will also give you a statutory right to reject interest rate increases, so that you can keep paying off your old debt at the old rate," Mr Brown said. "And we will ban companies from hiking up the interest rates they charge you – or increasing your credit limit without being asked – if you are struggling to make ends meet."