Credit card bills slashed in MBNA shake-up
Shoppers with MBNA credit cards will save hundreds of pounds in interest as the bank changes its system to pay off their most expensive debts first.
The move, which will affect the firm’s 5m credit card customers from September 1, comes four months earlier than required under new rules announced by the Government and the UK credit card industry last March.
Previously, when customers made a repayment this would go towards paying off their cheapest debts.
Typically, this means 0% purchase and balance transfer deals are usually cleared first, followed by purchases at around 15.9% and then cash withdrawals, which normally incur a charge of 27.9%.
This method was lucrative for firms but detrimental to customers.
According to figures from Nationwide BS, 9m borrowers a year pay an extra £225 because they pay the highest rate of interest for as long as possible.
Under the new order of payments someone still in the 0% purchase period on a credit card who takes money out from an ATM will have the cash withdrawal repaid first.
Nationwide, Saga and Co-op Bank all already have this more favourably way of paying of credit card debts.
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