David Prosser: Let's bounce these cheques for good

So, the Office of Fair Trading wants new laws that will force lenders to be much clearer about the charges they make for credit-card cheques. I've got a better idea. Just ban this grubby little money-making scheme altogether.

For the uninitiated, credit card cheques are the payment slips many lenders routinely send out to customers. You can use them in the same way as conventional cheques, to pay for goods and services, but the money comes out of your credit card account, rather than from your bank.

Naturally, there's a catch (several catches, in fact). Above all, spending on credit-card cheques does not usually qualify for an interest-free period - you start paying charges on the money borrowed as soon as you write the cheque.

In addition, the interest rate is often higher on this borrowing than it would be on plastic spending, and there may even be extra administration charges. Plus, purchases using credit card cheques don't automatically qualify for consumer protection rights, as those using a credit card do.

The OFT says borrowers often don't know about these drawbacks. The regulator is also concerned that many lenders send out credit-card cheques automatically to borrowers, even if they haven't asked for them.

However, Apacs, the trade association of credit-card lenders, claims credit card cheques are valuable for two reasons. First, it says, they're a handy way to make balance transfers between cards - you can write a cheque to the card lender charging you a more expensive rate in order to move this debt on to your cheaper plastic. Second, they can be useful in emergencies - to pay a plumber, say, who won't take plastic.

Pull the other one. Are lenders really suggesting that they send out millions of these cheques just in case their customers have a plumbing emergency or need to move debt between credit card accounts? The latter justification is particularly laughable, given that all lenders make it very easy for you to move money to them from their rivals.

This is a straightforward scam. Credit card lenders, increasingly worried about the cost of 0 per cent deals and the other gimmicks they must now offer to compete, have simply come up with yet another ruse to screw money out of their customers. It is sneaky and utterly indefensible.

Why waste time trying to force lenders to be more responsible? Let's just ban these cheques altogether.

PROMOTED VIDEO
Finacial products from our partners
Property search
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Accounts Payable

    £12 - £15 per hour: Cameron Kennedy Recruitment: Excellent opportunity to join...

    Technical BA - Banking - Bristol - £400pd

    £400 per hour: Orgtel: Technical Business Analyst - Banking - Bristol - £400pd...

    Account Management Strategy Manager

    £38000 - £42000 per annum + competitive: Real Staffing: Required skills:Previo...

    Business Analyst Consultant (Financial Services)

    £60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

    Day In a Page

    A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

    A History of the First World War in 100 Moments

    Peace without magnanimity - the summit in a railway siding that ended the fighting
    Scottish independence: How the Commonwealth Games could swing the vote

    Scottish independence: How the Commonwealth Games could swing the vote

    In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
    Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

    A writer spends a night on the streets

    Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
    Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

    UK's railways are entering a new golden age

    New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
    Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

    Conchita becomes a 'bride' on Paris catwalk

    Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
    Pétanque World Championship in Marseilles hit by

    Pétanque 'world cup' hit by death threats

    This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
    Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

    Why did we stop eating whelks?

    Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
    10 best women's sunglasses

    In the shade: 10 best women's sunglasses

    From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
    Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

    World Cup final: Messi? Mascherano is key for Argentina...

    No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
    Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

    Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

    18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
    The true Gaza back-story that the Israelis aren’t telling this week

    The true Gaza back-story that the Israelis aren’t telling this week

    A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
    A History of the First World War in 100 Moments: The German people demand an end to the fighting

    A History of the First World War in 100 Moments

    The German people demand an end to the fighting
    New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

    New play reveals what Oscar Wilde said at trials

    For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
    Can scientists save the world's sea life from

    Can scientists save our sea life?

    By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
    Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

    Richard III review

    Martin Freeman’s psychotic monarch is big on mockery but wanting in malice