The Nationwide Building Society has called on credit card service providers to make clear to their customers how their order of payment systems operate.
In around a year’s time these service providers will be obliged by law to be more transparent with regards to credit card order of payments, but the building society suggests that the delay will make it more difficult for many consumers to clear debt in 2008.
In fact, Nationwide claims that the relative lack of transparency over order of payments adds around £500 million to the UK’s overall credit card debt each year.
Nationwide director Jeremy Wood said: “Most providers apply payments to the cheapest debt first making it more expensive for the consumer and more profitable for themselves.
“What seems like a good deal at first can become unnecessarily costly for cardholders unless they clear their balance in full.”
Earlier this year, the accountancy firm KPMG predicted that debt management problems would see more than 130,000 people declared insolvent around the UK over the course of 2007.