U.K. card issuers, under pressure from the government to help customers struggling to repay debt, said they would limit interest rate increases to twice a year.

After meeting last week with Consumer Affairs Minister Gareth Thomas, the issuers, including HSBC Holdings PLC, Barclays PLC, Royal Bank of Scotland Group PLC, and Lloyds TSB Group PLC, also said they would work on a new code of conduct covering how and when customers would be notified about rate changes.

Mr. Thomas said that some companies have raised their rates by up to 10 percentage points when borrowers have faltered on payments.

In the last 18 months lenders have increased the overall rate on U.K. cards by 70 basis points, while the Bank of England has cut its benchmark lending rate 3.75 percentage points, to 2%, the lowest since 1951.

"These changes will not be without financial pain for credit card companies," Mr. Thomas said in a press release. "It was vital that we nipped in the bud the bad practices that were causing real hardship for borrowers."

Starting Jan. 1 the lenders will not raise rates on customers who miss payments or are receiving counseling about their debts. They also will not increase rates more than once every six months, and borrowers will get 30 days' notice of an increase, according to the Department of Business, Enterprise, and Regulatory Reform.

Jemma Smith, a spokeswoman for Apacs, the trade group for the U.K. card industry, said the agreement "will make a big difference to credit-card holders who are facing difficulties paying their credit card bill at a time when they most need it."

Half of the United Kingdom's population, or 30.8 million people, had a credit card last month, according to Apacs. In September outstanding balances stood at a nine-month high of $83 billion.

About a quarter of U.K. consumers expect to have some difficulty making payments on their cards, according to PriceWaterhouseCoopers, and chargeoffs may increase as a result.

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