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"MBNA shakes up credit card market"

By Reno | June 3rd, 2010 | General

Credit card giant MBNA has shaken up the credit card market by making changes to it allocation of repayments, according to recent reports. The move from MBNA comes after the release of new guidelines that would make credit card firms put repayments towards the most expensive debt first. However, MBNA is putting its new rules into force four months earlier than required.

The new allocation of repayments structure with MBNA will come into force from the start of September, and officials believe that customers with the credit card firm could save a fortune in interest once the allocation of repayments has been changed to ensure that the most expensive debt is paid off first. The firm has five million credit card customers, who will be pleased to hear the news.

In the past repayments made by customers was allocated towards the cheapest debt first, leaving the higher interest debt to continue accruing interest. Whilst credit card firms were making a fortune from allocating repayments in this way many consumers were losing out, as they ended up paying huge amounts of interest on their credit card debts that were left to accrue interest.

It is thought that millions of credit card customers end up paying hundreds of pounds extra each every year as a result of their most expensive credit card debts being left to fester whilst the cheapest debt, typically low interest and interest free debt, is paid off first.

One credit card customer said: “I’m really pleased to hear that MBNA are going to make the changes early. I’ve been spending on credit cards for years, and I can’ remember the last time I didn’t have any credit card debt, because the interest is so crippling I just never seem to be able to clear the balance.”

Tags: MBNA, Credit Cards, debt, interest, credit card

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