Brown demands responsible credit card lending

By Peter Griffiths

LONDON (Reuters) - Prime Minister Gordon Brown urged credit card companies on Tuesday to lend more responsibly after a study found they raised interest rates during a period when the central bank slashed borrowing costs.

A survey of 240 cards by banking research company Defaqto showed the average annual interest rate rose to 17.6 percent in November from 17.2 percent in May.

Since May when rates stood at 5 percent, the Bank of England has left rates on hold five times and cut them twice, including last week's surprise fall of 1.5 points to 3 percent.

That took rates to their lowest level in more than 50 years and prompted calls from the government, consumer groups and newspapers for banks to pass the cut onto the public in full.

Brown, who has promised to help families hit by rising bills, higher unemployment and falling house prices, has repeatedly called on banks to cut the cost of borrowing to help Britain cope with the global financial crisis.

Speaking at a London news conference, he said he would talk to the credit card industry to establish "clear principles to apply to the costs people face on their existing debts."

"This new responsible approach to lending that I think that the credit card industry wants to support will help households through the difficult period they have," he said.

His call came on a day when bleak housing and retail sales figures provided more evidence that the country faces a deepening recession.