Credit Card Confusion costs Consumers £500m
Confusion over the way credit cards charge for cash withdrawals and purchases is costing consumers £500m each year according to Nationwide Building Society.
Its research showed almost seven out of ten people didn’t know the debt charged at the highest interest rate – usually for cash withdrawals – is paid off last, which enables the providers to make more money.
Divisional director at Nationwide, Jeremy Wood says: “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. Most providers apply repayments to the cheapest debt first making it more expensive for you and more profitable for them.”
Chiltern’s Joanne Gill adds: “It’s outrageous that credit card companies still don’t communicate their charges effectively and this practise particularly hits those who are experiencing debt problems.
“Lenders shouldn’t take advantage of people who are vulnerable by charging them more. Customers should check their credit card agreements and resist the temptation to withdraw cash on them to avoid these charges.”
The Department of Trade and Industry announced that from 1 October 2008 all credit card providers have to let customer’s know the order of payments they use.