Credit Cards

House of Lords written question – answered on 25th January 2010.

Alert me about debates like this

Photo of Lord Newby Lord Newby Spokesperson for the Treasury

To ask Her Majesty's Government what action they are taking to ensure that when a customer makes a payment against their credit card debt it is allocated to the debt attracting the highest rate of interest first.

Photo of Lord Davies of Abersoch Lord Davies of Abersoch Minister of State, Foreign and Commonwealth Office, Minister of State, Department for Business, Innovation and Skills, Minister of State (Department for Business, Innovation and Skills) (Trade, Investment and Small Business) (also in the Foreign and Commonwealth Office), Minister of State (Foreign and Commonwealth Office) (UK Trade and Investment) (also in the Department for Business, Innovation and Skills)

The Government are concerned about the practice of allocating payments to the cheapest debt first and the extent to which consumers understand this, and its implications for their personal finances. We are therefore considering what action may be required as part of the current review of the regulation of credit and store cards which is being undertaken by the Department for Business, Innovation and Skills. Among other things, our consultation examines whether we should reverse the allocation of payments to ensure that expensive debts are paid off more quickly, as a very small number of lenders already do. We published a consultation document seeking views on potential reforms in October 2009. The consultation closes on 19 January 2010. The Government will issue final recommendations in the spring.

Does this answer the above question?

Yes0 people think so

No0 people think not

Would you like to ask a question like this yourself? Use our Freedom of Information site.