The Labour MP who championed a crackdown on payday lenders is taking aim at high-cost credit cards, calling for a cap on fees and interest charges to protect vulnerable customers.

Stella Creasy, credited with forcing the Treasury to impose a cap on interest rates and fees charged by payday loan companies such as Wonga and the Money Shop, will push in parliament on Tuesday for the introduction of similar rules for credit cards.

Speaking to the Guardian, the Walthamstow MP said she wanted restrictions on credit card charges to help tackle rising levels of problem debt. Consumer borrowing on credit cards, personal loans and car finance has spiralled to levels unseen since the 2008 financial crisis.



“It makes no sense to recognise the value of protecting those using payday loans from getting stuck in a spiral of debt but not those using credit cards,” she said.

Creasy and three other Labour MPs have signed an amendment to a finance bill due before the Commons on Tuesday that could lead to a limit being introduced should it be successful. The rule could result in lenders being blocked from charging a consumer more than the same amount they have borrowed in interest and fees.



Michael Sheen, the Welsh actor who recently launched a campaign against high-interest credit providers, threw his support behind Creasy’s efforts. Backing the potential cap, he said his End High Cost Credit Alliance, a campaign group of politicians, charities and technology companies, was worried about the impact of high-cost credit cards for vulnerable borrowers.

Facebook Twitter Pinterest Michael Sheen is backing the proposed cap. Photograph: Ken McKay/ITV/Rex/Shutterstock

The efforts come after the New Economics Foundation said credit card debt was becoming as unmanageable as payday loans had been before that industry was regulated. The Money Advice Service estimates up to 8.3 million people in the UK are lumbered with problem debt, while separate research suggests 3 million UK households pay more than 25% of their income to creditors.

Some credit card companies, such as Aqua and Vanquis, specialise in lending to poorer customers with weak credit scores and can set their annual interest rates in the region of 60%, which is more than triple the average quoted rate for the product, according to figures compiled by the Bank of England.



While Creasy is attempting to press ministers to consider a review of the case for capping credit card costs, the FCA has already ruled out taking such steps after a review of the market last year.

A spokesman for the watchdog said most of the UK’s 30 million credit card holders like the flexibility they provide, adding: “We decided that the revolving nature of credit card debt made it difficult for a cap to work, unlike fixed-sum high-cost short-term credit.”

The FCA instead introduced rules earlier this year forcing lenders to contact their customers once they have been in persistent debt for 18 months, with an option after 36 months to write-off those debts.



It said roughly 4 million people are in long-term credit card debt paying more in interest, fees and charges than they have repaid of their borrowing. The average customer in this group pays £2.50 in interest and fees for every £1 they repay of their borrowing.

A spokesman for the Treasury said: “It’s vital that people with credit cards are treated fairly, which is why we have given the FCA strong powers to protect consumers.”

