UK Money News
13th February 2008
'Credit card companies prioritising cheaper debts'
Credit card providers are fleecing customers by thousands of pounds by unfairly prioritising repayments to clients' cheapest debts, it has been claimed.
According to Steve Willey, head of credit cards at Moneysupermarket.com, the "common practice of providers is to allocate your payments to the cheapest debt first", with research from the site finding this was the case with all of the eight largest providers.
Mr Willey explained: "Take the case of someone who did a £2,000 balance transfer at zero per cent and then spent another £1,000 on the card.
"If they then paid off £2,500, the remaining £500 balance would accrue interest at the typical APR (usually around 15.9 per cent) rather than continue to enjoy a zero per cent rate."
The only provider found by Monesupermarket.com not to engage in the practice was Nationwide, prompting Mr Willey to call for greater transparency from credit card companies.
He said: "Card companies seemingly have no appetite to help their customers with a fair approach to repayments."
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