Consumers losing out over cheap debt repayments

The organisation estimates that providers of plastic profit to the tune of £500 million each year by allocating payment to balances with the lowest rate of interest, allowing higher interest balances to accrue more interest.

Nationwide wants other credit card providers to follow its example and apply payments to the highest debts first, which it believes can save customers £100 a year in interest.

Stuart Bernau, Nationwide executive director, commented: “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.”

Nationwide research shows that 30 per cent of people who take out a credit card due to a low introductory offer do not understand order of payments.