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Credit card exemptions needed in new EU consumer credit legislation

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Dutch credit card issuers are concerned about the future accessibility and cost of credit cards for consumers. Dutch credit cards risk soon falling under revised EU consumer credit legislation , known as theConsumerCredit Directive 2, or CCD2. This would make credit cards significantly more expensive and out of reach for some consumers.

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Dutch credit cards are mostly so-called ‘deferred debit cards’, debit cards with a deferred monthly repayment in one lump sum. A cardholder’s debt to the card issuer is therefore short-term and cannot accumulate further each month.

Member State option

Common Dutch credit cards are exempt from a number of provisions in the current CCD1, thanks to a member state option for ‘deferred debit cards’. This makes credit cards very accessible to Dutch consumers, at relatively low cost. When transposing CCD2 into Dutch law, the government threatens to remove this member state option.

Consequences for consumers

If the member state option for ‘deferred debit cards’ is dropped, these are the expected consequences for consumers:

In order to keep credit cards accessible and affordable for as many Dutch people as possible, the Dutch credit card issuers – ING, Rabobank, International Card Services and American Express – are asking the government to maintain the existing member state option when CCD2 is introduced. They do so in a joint response to a public consultation by the Ministry of Finance .

Deposit and down payments

Credit cards are mainly an irreplaceable and inexpensive payment instrument for many consumers to pay a deposit for rental cars, pleasure boats and holiday homes, or to make an advance payment for a later purchase. A credit card deposit payment is only reserved on the credit card’s credit balance. That reservation is not debited from the cardholder’s payment account. With an ordinary debit card, however, a reservation is deducted directly from the balance of the linked payment account.

More choice

Many international landlords of cars, boats and holiday homes require customers to pay the rent and deposit with a credit card; they do not accept other payment instruments, including updated debit cards. Without a credit card, this leaves a consumer with less choice when renting especially means of transport and holiday accommodation.

Read the joint response to the Dutch ‘implementation law’ for CCD2 on behalf of credit card issuers .

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