The new “rights” for United Kingdom credit cardholders the UK Card Association announced earlier this week demonstrate that the payments industry can make changes and provide a smart and competitive service to consumers, HSBC Holdings PLC contends. The association made the announcement in collaboration with the UK Department for Business, Innovation and Skills (see story).

These rights are good news for consumers, and the prevention of an unsolicited credit-limit increase is especially beneficial, a spokesperson for the UK-based issuer tells PaymentsSource. Under the new rules, consumers struggling financially will not have to accept an automatic credit-limit increase. Issuers also will have to give consumers offered a credit-limit increase 30 days’ notice with an option to opt out.

Of the 7.5 million HSBC-branded cardholders in the UK, most are relatively young, and “we like to offer a ‘low-and-grow’ plan to our customers, the spokesperson explains. Over time, when cardholder demonstrate they are responsible and show good behavior with the use of their cards, then HSBC can increase their credit limits.

The main change to the payments industry, the allocation of payments, is a genuine consumer benefit, HSBC also notes. Issuers will now apply payments to the highest-cost debt on a credit card so that debt is paid off first.

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