OFT/FSA comparison site a step in the right direction

Nationwide Building Society sees the joint launch of a new credit card comparison site by the Office of Fair Trading (OFT) and the Financial Services Authority (FSA) as a valuable tool for consumers and a long-awaited addition to the industry. However, the Society calls on the OFT and FSA to ensure that the order of payments used by providers is highlighted and taken into consideration when generating the best buys. The Society is concerned that many financial services providers are using smoke and mirror tactics to market their products. By using headline rates and burying account information in the small print, some customers could find the product they end up choosing is not what it seems.

As people try to get their finances in check and look to credit cards with 0% balance transfer deals to help manage their debt, many will find, if they make a purchase, they won't be able to clear the cost of the purchase until the balance transfer has been paid off in full. Nationwide has campaigned for many years to bring about change in the industry to stop this from happening and calls on providers to at least highlight how much an adverse order of payments is going to cost them.

Jeremy Wood, director for banking and credit cards at Nationwide, says: "For too long many credit card providers have got away with applying an adverse order of payments to their customers and we hope this new comparison site will address this sharp practice. Consumers can ill afford to lose £500 million each year in unnecessary interest charges and we hope the new site will help them make informed decisions and reduce the confusion around which is the best card.

"Many credit card providers use low introductory rates to lure people into opening an account. These offers can look very appealing, but when you scratch beneath the surface you discover that credit card holders often don't receive the full benefit of these low rates. Most providers apply repayments to the cheapest debt first making it more expensive for consumers and more profitable for the banks."