Lenders urged to ‘act now on order of payments’

Money lenders in the UK have been urged to act now to inform their customers about what order their debt repayments are allocated.

A law will be introduced in October of this year that will oblige financial service firms to make clear the order of repayments and Nationwide Building Society is keen to see this approach taken immediately.

The building society has suggested that a lack of clarity over the issues leads to large-scale overpayment on credit card debt and a worsening of financial problems for many people around the country.

“Most providers apply payments to the cheapest debt first making it more expensive for the consumer and more profitable for them,” said Jeremy Wood from Nationwide.

“We call on the industry to do the right thing for consumers and implement the change now, rather than wait until the October 2008 deadline,” he added.

Last week, the Cheshire Building Society urged people facing debt management problems to find out where they can receive appropriate help before the issues spiral out of control.