‘Card providers should clarify order of payments now’

Banks should detail what order payments are made now rather than later when new rules come into effect, claims Nationwide.

In 12 months time, new regulations from the Department for Business, Enterprise and Regulatory Reform will take place forcing all credit card providers to show which transactions will be paid off first. However Nationwide is calling for lenders to take action sooner.

Many credit card providers currently pay off the cheapest debts first, leaving the dearer transactions to generate interest and making the customer’s bill more expensive.

“What seems like a good deal at first can become unnecessarily costly for cardholders unless they clear their balance in full,” said Nationwide director Jeremy Wood.

He explained that the announcement made in April that all card providers should show the order of payments is welcomed by the building society but that lenders should put the new rules into force immediately.

According to Credit Action the total credit card debt in August 2007 was £53.4 billion. The British Bankers’ Association claims that just under three-quarters of all UK credit cards were gathering interest in July 2007.

© Adfero Ltd

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