Nationwide pleased about BIS decision

The credit card industry in the UK has been at the centre of a major crackdown recently, with government officials and regulators looking at ways to make things fairer for the consumer when it comes to credit card repayments. Recent proposals from the government were put forward to the Department for Business Innovation and Skills, and amongst the various suggestions that were put forward was an important issue relating to the allocation of repayments.

In the most part credit card providers in the UK apply any monthly repayments from the customer towards the lower interest debts first rather than applying them to higher interest debts or in order of when debts were accrued.

Unfortunately this means that the higher interest debt on an account is left to fester and accrue more interest whilst the lower interest debt gets paid back first.

The new proposals were looking at the allocation of repayments, and the aim was to ensure that the higher interest debts were repaid first, so that the consumer would end up paying less interest on their overall debt.

The Nationwide is one of the few card providers that does not allocate repayments to lower interest debt before tackling the higher interest debt, and the proposal has been welcomed by the lender, which said that the UK should follow the lead of the United States and ensure that all credit card providers are operating in this way.

A spokesperson from the building society said: “We are delighted that BIS have included order of payments in the review. We think all UK credit card providers should allocate payments in a positive way. The US has already recognised that the practice of paying the cheapest debt first is unfair to customers and is forcing lenders to be more consumer friendly.”

Tags: nationwide, credit card debt, credit card repayments, order, Business Innovation, various suggestions