Credit card firms ‘abusing order of payments’

Posted 2008-02-18

A clear majority of credit card firms are structuring their debt repayment schemes to the disadvantage of borrowers, one new study has suggested.

Research conducted by price comparison website MoneySupermarket.com has found that all of the eight largest credit card firms in the UK oblige their consumers to pay off their least expensive debt first.

That leaves the most costly loans accruing more and more interest, holding borrowers back from solvency and resulting in an estimated £500 million of unnecessary interest charges each year.

Commenting on the ubiquity of unfavourable order of payment policies, Steve Willey, head of credit cards at MoneySupermarket.com, lambasted major credit card companies for having “no appetite” for fairness.

“Consumers really need to stay one step ahead of the game if they want to avoid lining the pockets of the banks,” he advised. “They should look to get a different card to spend with.”

The only major credit card provider to prioritise repayment of the most costly loans was Nationwide.

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