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MBNA payment order change could save you £100s

Change will benefit thousands of consumers

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Unless you really need to, try not to withdraw cash using your credit card – the interest rates are eye-wateringly high

In a move that could save customers hundreds of pounds, credit card leviathan MBNA is to introduce a positive order of payments four months earlier than the deadline agreed with the government.

The move is good news for thousands of consumers who have been caught out when they’ve used the same credit card for different purposes. Under the old rules, any repayments made by the cardholder were allocated against the debt with the lowest interest rate first. For example, if you transferred £2,000 onto a credit card under a 0% balance transfer deal and then spent £1,000 on new purchases at 15.9%, any repayments you made would be allocated against the 0% balance first, leaving the purchases to rack up interest at their standard APR until the 0% balance was paid off in full.

Under the new rules, to be introduced across the industry by the end of the year, payments must be allocated against the most expensive debt first, reducing the amount of interest cardholders will have to pay. For more details on the order-of-payments trap in force at the moment, check out the Which? guide to choosing a credit card.

A welcome move by MBNA, but customer service still poor

Which? credit card expert Martyn Saville commented: ‘Which? has long been calling for an end to this unfair practice, so it’s pleasing to finally see the new order of repayment rules coming into force at the end of the year. MBNA is to be applauded for introducing the positive order of payments four months early.

‘However, MBNA is already playing catch-up with the positive orders operated voluntarily by Nationwide and Saga. And let’s hope that MBNA now works equally hard to improve its shameful customer service score of just 54% in our satisfaction survey, languishing as it does towards the very bottom of the table. The best provider for customer service, John Lewis/Waitrose, scores an impressive 88%.’

Which? Best Buy credit cards and televisions

If you need advice to help you choose the best credit card for your needs, read the free Which? guide to choosing a credit card.

Once you know the best type of card for you, check out Which? Best Rate credit cards to find the most competitive deal available today, whether it’s a cashback card, a card offering 0% on purchases or the longest 0% deal on balance transfers.

And check out Which? Recommended Providers to find out which credit companies offer the best customer service without hitting you in the pocket.

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