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Card providers `fuelling debt problems with payment allocations`

14/02/2008

Many UK consumers could be forced on to debt consolidation schemes as a result of their credit card companies not allocating payments to the most expensive debt first, new research has revealed.

Most of the major credit card companies do not allocate payments made by the customer to the most expensive debt first, increasing the levels of interest they have to pay on those debts, a study by moneysupermarket found.

Nationwide is the only major company which allocates payments to the customers most expensive debts.

Steve Willey, head of credit cards at moneysupermarket, said: "The common practice of providers is to allocate your payments to the cheapest debts first. Thankfully, Nationwide plays a lot fairer by the consumer, by clearing your most expensive debts first."

According to Credit Action, the average UK consumer owed £4,713 in credit card payments and overdrafts at the end of December.

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