Adverse order of payments a hot topic at Nationwide

Consumers’ emotions are running high over the order of payments adopted by most credit card providers.

According to research from Nationwide, 56% of credit card customers questioned would be either angry, shocked or surprised if they found that their credit card provider paid off their cheapest debt first.

However, the majority of providers do exactly that, leaving items with high rates (such as cash advances) to continue to accrue interest, while paying off the cheapest balances first.

The study also reveals that nearly two-thirds of credit card customers still do not understand the order in which their repayments are allocated, and comprehension is dwindling despite a commitment to “transparency” by banks and building societies.

According to the lender, order of payments is a complex issue that particularly affects the vulnerable.

As a result, the Citizens Advice Bureau (CAB) dealt with over 300,000 new enquiries about credit, store and charge card debts over the last year, making it the biggest single issue faced by CAB staff.

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

In October, the Department of Business, Innovation and Skills published a Credit and Store Card Review that called for an end to the adverse order of payments within the UK, and Mr Rhodes believes the results of the survey “send a clear message to the Government: consumers want them to intervene to stop this unfair practice”.

Nationwide estimates that UK consumers would save around £500 million if all credit card providers adopted a positive order of payments.

Tags: adverse, credit card, Nationwide News, order of payments, research

Category: Banking News, Borrowing & Lending News, Nationwide News