Clarify order of payments now, says card provider

Credit card companies should not wait until regulations come in to highlight the significance to customers of which order their payments are made in, according to one provider.

Nationwide believes that instead of holding back from drawing attention to the order of payments until the required date of October 2008, firms should spell out the facts to their card holders now.

The department for Business, Enterprise and Regulatory Reform’s (BERR) will require a passage on each credit card statement explaining that providers must "signpost" where the order of payments can be found.

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.

"We welcome the move by the BERR to help gain more clarity for consumers, by displaying a message explaining the order of payments, but 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."

Nationwide have attempted to set an example by including a Summary Box setting out how the provider applies payments.