Consumers 'still don't understand credit card payments'
Published On 26 June 2007
The majority of credit card customers in the UK still do not understand how their provider calculates which debt they pay off first, a new report claims.Data gathered by Nationwide Building Society found that 69 per cent of credit card customers could not correctly explain order in which their repayments are processed.
Just 29 per cent of people correctly said that the items with the lowest rate if interest are paid off first, leaving the most expensive debt longest.
Nationwide added that it was the only major credit card provider who let users pay of their most expensive debt first and urged other lenders to do the same ahead of rule change in October which will force credit card companies to explained their order of payments.
"Nationwide has long campaigned for a positive order of payments for all credit card customers," explained Jeremy Wood, a divisional director at Nationwide.
"Many credit card providers use low introductory rates to lure people into opening an account. These offers can look very appealing, but when you scratch beneath the surface you discover that credit card holders often don’t receive the full benefit of these low rates.
"Something needs to change as it's unacceptable that over two-thirds (69 per cent) of credit card holders do not know how their payments are allocated."
Recently, an industry expert said that he expects credit card borrowing to increase in the coming months as people use plastic to pay for holidays.
