Financial health warning on credit card bills
Credit card firms will be forced to include a financial health warning on monthly bill statements if the Conservatives win the next general election.
Under the Tory plans, lenders will have to clearly explain the full cost of repaying debt.
Bill statements will include information on how much debt will balloon if borrowers only return the minimum repayment, and how long it will take to pay off the debt.
Recent research by debt charity Credit Action found that the average UK consumer owes nearly £5,000 in credit card debt and personal loans.
According to Tory estimates, a borrower who pays 2% each month on a £3,000 debt at 17.9% APR would take 41 years to pay off the debt and will have spent £6,300 in interest payments.
Shadow chancellor George Osborne said: “These policies will help consumers make more informed financial decisions.”
He added that lenders will also benefit because as borrowers become more informed fewer people will default on their loans.