Keep your card safe

Play it fair!

Nationwide Building Society has called for credit card providers to play fair by allocating customers’ repayments to their most expensive debt first. The appeal comes in the wake of research which estimated credit card providers make around £500m of profit each year by allocating repayments to balances with the lowest rate of interest. By doing this, balances with higher interest rates, such as cash withdrawals and purchases accrue interest unnecessarily thereby increasing card holders’ debt.
Executive director of Nationwide, Stuart Bernau, warned consumers that ‘many credit card providers use low introductory rates to lure people into opening an account’ and highlighted that ‘when you scratch beneath the surface you discover that credit card holders often don’t receive the full benefit of these low rates.’
Nationwide’s research has shown that 40% of consumers are not aware that credit card providers who offer low introductory rates use repayments to pay of the cheapest debt first. This means when consumers make payments to their credit card provider, they are not always aware that the debts accruing the most interest are left to grow, while the cheaper debts are paid of first.
In a move to counteract this, the building society is launching a television advert which demonstrates the pitfalls of such order of payment for the customer. Nationwide’s also offer a credit card which allocates repayments to the most expensive debt first, before moving on to the cheaper debts. The different order of payment has been estimated at saving the card holder around £100 a year.