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* Some card companies profiting from higher risk customers
* FCA has concerns over use of cards as revolving credit
* FCA has powers to force card issuers to make changes (Adds more detail, industry reaction)
By Huw Jones
LONDON, Nov 25 (Reuters) - Britain's credit card market isnot working well for struggling customers who over-borrow andpay unexpectedly high rates, the country's financial regulatorsaid on Tuesday, as it launched a study that could change theway cards are sold.
The Financial Conduct Authority (FCA) said it would studyhow easy it is for customers in Europe's biggest credit cardmarket to shop around, how card providers recover costs, and theextent of unaffordable debt.
Britons hold 70 percent of all Europe's credit cards, witharound 30 million consumers sitting on a combined 56.9 billionpounds ($89.2 billion) of debt.
The FCA said that its study, which will include 200 cardsoffered by banks and standalone businesses, would focusprimarily on the use of the cards as "a means of revolvingcredit" -- or a way of keeping sometimes heavy debts at bay,often at high cost.
"We want to understand in more depth what drives consumersto make the choices they do and how firms develop the servicesthey offer," FCA director of policy Christopher Woolard said.
Some customers, the FCA warned, could be over-borrowing andtaking on too much debt, and "there are signs that some issuersmay profit more from higher risk borrowers".
The FCA can force credit card providers to make changes, andis already cracking down on other types of credit such as paydayloans as the watchdog flexes its consumer protection muscles.
Tuesday's announcement follows an initial review publishedin April that raised concerns about "survival borrowers", orthose barely able to make card repayments.
The UK Cards Association, an industry body, said it has along-standing commitment to responsible lending andtransparency, and over the last five years has introduced manychanges including on credit limits and re-pricing of debt.
The FCA said the interchange fees, paid between banks foraccepting card based transactions, would not be a major focus asthey come under the new Payments Systems Regulator.
"We will, however, consider, the possible implications ofthe proposed interchange fee cap on the evolution of the creditcard market," the FCA said.
The European Union is capping interchange fees charged byMasterCard and Visa to ensure they are fair andtransparent.
(1 U.S. dollar = 0.6376 British pound) (Editing by David Clarke and Clara Ferreira Marques)
