Government proposals include stopping card firms changing interest rates on existing debts and ensuring the most expensive debts are paid off first.

But now a trade body, the UK Cards Association, has claimed that the changes would push more people into financial difficulty.

There are 30 million UK credit card customers holding 66 million cards.

The industry said that 62% of all UK adults had at least one credit card, but borrowing on these cards had been in “gentle decline” since 2005.

Despite greater caution from lenders about who gets a card, the government is keen to outlaw certain practices that it regarded as unfair and has challenged the industry to “clean up its act”.

It invited responses to proposals, published in October, which included:
* changing the order of priority for credit card repayments, so that the most expensive debts, such as cash advances, are paid off first
* increasing the minimum amount that must be paid off each month to accelerate the overall rate of repayment
* banning the practice of raising borrowers’ credit limits without their consent
* restricting or banning increases in interest rates on debts already incurred.

The plans follow other limits on credit card practices brought in during 2009, aimed at bringing more transparency for customers.

But the latest proposals have brought a strident response from the industry, which claimed in a 230-page report that customers would not benefit from some of the planned changes.

“These options would reduce competition within the industry,” said Melanie Johnson, a former Labour MP who chairs the UK Cards Association.

“They would also have far reaching consequences for customers and lenders alike and would change the basic ‘deal’ offered by lenders to their customers and lead to increased financial difficulties for many and to more defaults.”