Consumer anger as cheapest credit card debts paid off first

| December 15, 2009
”Consumer

The Government recently unveiled plans to crackdown on credit card and store companies, which will see a change in the order of priority for credit card repayments, so that the most expensive debts are paid off first.

The proposals are being put out to consultation by the Department for Business Innovation and Skills (BIS).

The Nationwide Building Society has been one of the few financial institutions that has been vocal on this subject and has regularly called on the UK credit card industry to abandon the practice of adverse order of payments.

Currently, most credit and store card companies usually make consumers pay off the cheapest debt first, while more expensive debt – such as cash withdrawn on a credit card – is left until last.

However, research from the Nationwide has found that if consumers found out that their credit card provider pays off their cheapest debt first, 56% would be angry, 38% would be shocked, while 10% would be surprised.

The research also found that currently, 63% of credit card customers still do not understand the order in which their repayments are allocated, compared to 69% in 2007.

Commenting on its findings, Nationwide’s product and marketing director, Chris Rhodes, said: “Our research results are unequivocal: consumers still don’t understand this issue and continue to be penalised.

“Further transparency will simply not work. This is a fairness issue and a positive order of payments is now the fairest way forward for consumers,” he added.

“The results send a clear message to the Government: consumers want them to intervene to stop this unfair practice. We hope the BIS review makes negative order of payments a thing of the past,” concluded Mr Rhodes.

Tags: , ,


Comments (0)

Trackback URL | Comments RSS Feed

There are no comments yet. Why not be the first to speak your mind.

Comments are closed.