Michelle Slade, spokesperson for Moneyfacts.co.uk comments: “For far too long the card companies have been able to get away with practices that are not in the best interests of the consumer.

“Most consumers are unaware of the payment hierarchy system on credit cards, that in most instances sees the cheapest debt repaid first while the most expensive debt is paid off last.

“This practice earns the card companies a fortune in additional interest at the expense of the consumer and goes against the advice consumers would receive at a debt agency, which tells them to repay the most expensive debt first.

“Card companies including Bank of Scotland, Capital One Bank, Halifax and MBNA Europe Bank have all made recent moves to reduce the minimum payment customers are required to pay.

“This process that gives short term gains to customers looking to reduce their outgoing, but stores up longer term problems, as the total amount they will end up paying will be much greater.

“Increasing the minimum repayment will reduce both the total interest paid and the time it takes to clear the debt and will have a positive impact for most customers.

“For customers already struggling to meet repayments, an increase in how much they are required to pay each month could tip them over the edge. More measures would need to be put in place to stop these customers getting further into debt.

“Cleaning up the credit card industry’s act is to be applauded, but the moves are likely to leave a big hole in the coffers of card companies.

“If history repeats itself, we are likely to see customers paying for this lost revenue elsewhere.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.