The banks would have to offer cast-iron guarantees of reduced interest rates for the Prices Surveillance Authority's credit card recommendations to work, Consumer Affairs Minister Yvonne Henderson said today.
"Significantly lower interest rates will need to be offered by the banks in return for the right to charge an up-front fee on credit cards," Mrs Henderson said.
"Without such a guarantee, consumers will not benefit from the changes proposed in the PSA's report.
"The Authority says that up-front fees will be conditional on close scrutiny and formal monitoring to ensure that the benefits will be passed on to consumers.
"But it does not limit the size of the fee to be allowed, nor indicate the size of the interest rate cuts expected.
"The recommendation on allowing discounts for cash purchases is to be welcomed. But the recommendation to allow merchants to pass on the full merchant fee to buyers will not help consumers."
Mrs Henderson said State Consumer Affairs Ministers would be seeking far greater detail on the PSA's proposals, particularly on the mechanics of keeping card interest rates down.
"The very broad statements of the report do not help people to have confidence in it.
"Under the proposals to allow a wide range of credit card packages, for instance, consumers may find it difficult to compare the advantages of each package because there does not appear to be provision for sufficient information."
"It is also very disturbing that the report calls for an end to the prohibition on up-front fees in return for adequate disclosure of credit card charges, instead of in return for real and sustained falls in interest rates."
