Joe Costello (Dublin Central, Labour)
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Question 66: To ask the Minister for Finance his views on the high level of credit card debt held by consumers here; if consideration has been given to increasing the minimum payment on credit card balances; and if he will make a statement on the matter. [45377/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I have no role in relation to payment terms for commercial debt (including credit card debt) which, for the generality is a matter, for the parties concerned.

While the overall level of debt on credit cards has been rising, the pace at which it has been growing has declined significantly. From a high of almost 20% year on year growth in March 2007, the equivalent data for outstanding indebtedness on credit cards in October 2008 was an increase of less than 9%. Credit card debt represents less than 2% of personal sector credit overall. In addition, credit card data refers to debt outstanding on all credit cards at end-month and includes balances that subsequently may be paid in full at the payment due date. The increase in the number of credit cards issued and the amount of debt outstanding is in line with a general trend of increased market penetration in the EU and a move towards electronic retail payment methods.

A survey, conducted by the Financial Regulator, indicated in March 2007 that 55% pay their balance in full each month, thus incurring no interest. Unfortunately, a small minority of borrowers develop credit card debt problems. Anyone experiencing difficulty in repaying such a debt should discuss the matter with the credit card provider and seek appropriate advice without delay. The Money Advice and Budgeting Service (MABS), which falls under the remit of my colleague, the Minister for Social and Family Affairs, is a national, free, confidential and independent service for people in debt, or in danger of getting into debt. MABS offices, throughout the country, work with people in order to assist them with their financial planning and budgeting for the future.

As Minister for Finance, I have consistently highlighted the need for responsible behaviour by both borrowers and lenders and, in particular, the need to factor into their financial decision making the effects of potential future changes in economic and financial conditions.

All credit card providers must comply with the Financial Regulator's Consumer Protection Code, which states that financial services providers must act in the customers' best interests and only provide financial products that are suitable for the consumer. In addition, the Code specifies that when a credit institution is announcing a change in its interest rates, it must state clearly the effective date of the new rate in its notification. The credit institution must also update the interest rate details on its information services as soon as the change comes into effect. Furthermore a consumer's credit card limit may only be increased following a request from the consumer.

The Financial Regulator spends significant time and resources informing consumers about the potential risks of availing of credit card credit. Its publications, including its credit card cost surveys, are designed to help consumers choose the card that best suits their needs. In addition, its help-line and website provide details to help those who have problems with credit card debt. In particular, its publication "Managing your Money" is aimed at helping consumers to plan for the future, control spending and avoid debt problems.

The Financial Regulator's Consumer Director regularly highlights the issues of credit card debt in the television and radio interviews, the key messages for consumers being: Use your credit card for short-term credit but failure to pay your bill in full every month can mean that debt can build up quickly. Shop around, using the online credit card cost comparisons, to see if you can get a card with a lower interest rate or a no-interest introductory special offer. Don't just make the minimum payment — it will not be enough to reduce your balance in a reasonable time and you will end up paying a lot of money in the long-term. If you cannot pay your bill in full, pay off as much as you can afford to, don't miss any repayments and don't use your card again until the balance is paid off.

The Financial Regulator has also carried out a review of the transparency of the information contained on credit card statements and will be consulting on this as part of the Review of the Consumer Protection Code due to begin in 2009.

Finally, the Irish Banking Federation (IBF) and its members do not recommend credit cards as a tool for longer-term borrowing. The credit card is a beneficial payment instrument — offering credit, flexibility and safety — when used responsibly. It is not suitable for long-term credit — there are other more suitable forms available such as personal loans.