Nationwide Building Society are campaigning for credit card providers to allow borrowers to clearly see the order of payments system used. The urging comes ahead of regulation that will force credit card lenders to do the above.
Nationwide have become the champions of increased transparency in the credit card market . The Department of Business, Enterprise and Regulatory Reform will introduce regulation in October 2008 that requires providers to display a message on their credit card statement that highlights how payments are ordered.
Usually, credit card providers make cardholders pay for the cheapest debt first, meaning expensive transactions can accrue and lead to higher charges. Nationwide have estimated that consumers stump up some £500 million extra in interest repayments due to this system.
A director of Nationwide, Jeremy Wood, reportedly commented: "Most providers apply payments to the cheapest debt first making it more expensive for the consumer and more profitable for themselves. What seems like a good deal at first can become unnecessarily costly for cardholders unless they clear their balance in full. We welcome the move by the BERR to help gain more clarity for consumers, by displaying a message explaining the order of payments, but we call on the industry to do the right thing for consumers and implement the change now, rather than wait until the October 2008 deadline."
Credit card consumers stump up millions extra
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Credit card consumers stump up millions extra
Wed, 31 Oct 2007
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