Nationwide welcomes crackdown on credit and store cards

”Nationwide

Nationwide Building Society has welcomed Government proposals to crackdown on credit and store companies.

Earlier this week, a set of proposals by the Government, which are being put out to consultation by the Department for Business Innovation and Skills (BIS), will see a change in the order of priority for credit card repayments, so that the most expensive debts are paid off first.

Furthermore, the practice of raising borrowers’ credit limits without their prior consent will be banned.

The Nationwide 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.

The cost to UK consumers of this practice is estimated to be approximately £500 million.

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store card companies usually make consumers pay off the cheapest debt first, while more expensive debt - such as cash withdrawn on a credit card - is left until last.

Chris Rhodes, Nationwide’s product and marketing director, comments: “We are delighted that BIS have included order of payments in the review. We think all UK credit card providers should allocate payments in a positive way. The US has already recognised that the practice of paying the cheapest debt first is unfair to customers and is forcing lenders to be more consumer friendly.”

Meanwhile, Michelle Slade of Moneyfacts said a change in the way debts are paid off “would be a real step forward for consumer fairness in the credit card market.”

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