Lender call over cards

The practice of credit card debts being operated on the basis of the least expensive debt being paid off first should be scrapped, Nationwide Building Society has argued.

Welcoming an enquiry into the sector by the Department of Business, Innovation and Skills, the lender called for the practice of adverse payment to end.

It said that it means consumers pay extra interest on their borrowings, with the total amount extra being charged to British consumers last year as a result of such policies being £500 million.

Nearly all the UK card providers use the system, Nationwide noted.

Paying off credit card debts should always be the first priority for anyone who owes money, president of business recovery specialists R3 Peter Sargent said last month.

Responding to figures from Credit Action last month showing the overall UK personal debt burden was easing, he stated that the prevailing trend for consumers to prioritise mortgages is wrong because credit cards cost more to service.

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