Shadow chancellor John McDonnell is set to say that personal debt levels are a threat to the economy at the Labour Party Conference today in Brighton.
He has called on the government to set maximum charges for credit card customers who are trapped in “persistent debt”.
It’s estimated that more than three million Britons pay more in interest and charges on debt they pay back over capital borrowed on an 18 month period.
The Financial Conduct Authority in April proposed has measures to encourage companies to reduce the number of customers in so-called persistent debt.
But Liz Truss, a Conservative finance department minister, said: “Labour take it too far and would damage our economy, meaning fewer jobs, higher taxes and more debt.”
Experts said consumer apathy is a bigger problem.
Hannah Maundrell from money.co.uk said: “If Labour’s proposal ever came into force it sounds like it could help people in the debt spiral but it’s not getting to the root of the problem.
“If you are in debt, don’t bank on help from the government any time soon.
“Apathy is costing us millions, and lenders rely on us not being on top of our finances to make big money.
“Tempting zero per cent deals can end up costing you a crazy amount in interest if you don’t switch when the rate takes a hike.
“Credit card companies aren’t offering record interest free offers out of the generosity of their hearts – it’s all about their bottom line.
“Don’t pay interest if you can help it – play the banks at their own game by making your borrowing as cheap as possible.”
Mr McDonnell also promised to renationalise rail, water and energy companies, as well as the Royal Mail.
And said Labour would end Private Finance Initiatives, bringing the contracts back in-house.