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Is your credit card provider playing fair?

Is your credit card provider playing fair?

Category: Credit cards

Updated: 24/11/2010
First Published: 24/11/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Credit card borrowers are counting down the days until new rules come into force which could save them hundreds of pounds.

From 1 January 2011, credit card providers will no longer be able to select the order that credit card debt is repaid.

Up until recently, it has been common practice for credit card providers to allocate payments made by borrowers to the cheapest debt first.

This leaves the most expensive debt accruing interest over a longer period, and therefore adds significantly to the amount of money that borrowers have to repay.

Thankfully, the Office of Fair Trading has rightfully deemed this unfair, with providers having until the turn of the year to put their houses in order.

As a result of the change, a credit card borrower who has a balance of £3,000* at outset and repays £100 per month could see the interest they are charged over the life of the debt fall by more than 40%, from £1,155 to £670.

"This news couldn't have come at a better time for those customers facing large credit card bills after Christmas," said Michelle Slade, spokesperson for

"Changing the order debt is repaid will save consumers a small fortune in interest charges."

Although some credit card providers, including American Express, Capital One Bank, MBNA Europe Bank, Nationwide BS, SAGA, Sainsbury's Finance, The Co-operative Bank and Virgin Money, already repay the most expensive debt first, others are dragging their feet.

"With many of the largest credit card providers leaving it right up to the last minute in order to squeeze as much extra interest out of customers as possible, it is definitely worth checking to see what your provider's policy is," added Ms Slade.

Notes: * Split between £1,000 balance transfer at 0% for 12 months, £1,000 new purchases at average purchase rate of 18.7% and £1,000 cash advance at average rate of 25.02%

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