The Co-operative Bank has admitted it was wrong to threaten to punish credit card customers who legitimately reject an interest rate rise.

Following news of this controversial policy on, Co-op has agreed to review the necessity for customers to repay their debt in full within six months of saying no to a rise or end up on the hiked rate anyway (see the Reject Rate Jacking guide and Co-op rate rise threat MSE News story).

As most of those with thousands of pounds of debt are unlikely to be able to afford full repayment in six months they will end up paying more.

Card companies are allowed to hike credit card interest rates but you can continue paying the existing rate if you opt-out of the jump within 60 days of receiving notice.

By taking this option, consumers can no longer spend on a card. Rules agreed between the Department for Business, Innovation and Skills, and the credit card industry last year, state consumers must then be given a "reasonable" time to clear existing debts.

Co-op's six-month rule, effective from 1 February, is out of line with industry standards.

Credit card giants American Express, Barclaycard, Lloyds TSB and MBNA all allow customers who reject a rate hike as much time as necessary to clear payments, as long as borrowers keep up-to-date.

A Co-op spokeswoman says: "Following the [MSE] article, and after further guidance from the industry, we are currently reviewing with the intention of removing our policy of stating a specified timescale (6 months) for customers to repay any existing credit card debts, when rejecting a rate increase.

"We pride ourselves on our fair and honest approach and it is important to note that our original decision to incorporate a specified timescale was done in the spirit of being open and transparent with our customers and providing some clear guidelines for customers.

"Where any customer is in hardship, any timeframe was and always will be considered on an individual basis, with particular regard to each customer's financial circumstances."

She adds that the bank has yet to define whether or not there will be a time-scale for consumers to make repayments.

Further reading/Key Links

Rate hikes: Reject Rate Jacking
Cut credit card debt: Best balance transfers