Beware of adverse order of payments

Nationwide has highlighted the hidden costs incurred by customers due to the adverse order of payments operated by credit card companies.

Which? has also warned credit card holders of the charges, which can easily go unnoticed.

Order of Payments (OOP) is the sequence that credit card bills are paid with, banks have the option of making this more or less costly for the customer.

Some banks choose to pay off the smallest first, leaving interest to build up on more expensive debts like purchases and cash advances.

"Most providers apply repayments to the cheapest debt first making it unknowingly more expensive for consumers but more profitable for the credit card providers," explained Jeremy Wood, Nationwide banking and credit cards director.

Research from Nationwide Building Society found that over 69 per cent of those quizzed in a survey did not know the OOP of their credit card.