Virgin Money changes credit card order of payments
By UK CreditCards.com
Published: 2 July 2010
The UK credit card industry will be subjected to new regulations regarding the allocation of payments at the end of this year. However, Virgin Money has revealed that it will be implementing the changes sooner rather than later.
Earlier this year, the Labour government confirmed that five new measures will be incorporated into the industry in order to offer consumers more protection. One of the main talking points was the proposed alteration to the 'order of payments,' which will require providers to direct credit card holders' payments towards the most expensive existing debts (those with the highest interest rates) first. The changes were announced following a consultation launched by the Department for Business, Innovation and Skills.
'Positive payment hierarchy'
Virgin Money has confirmed this week that it intends to adopt this 'positive payment hierarchy' from September onwards, rather than wait for the end of 2010. The company's customers will benefit in that they will pay less interest if they are unable to fully clear their balance every month. For example, any individual transferring a £3,000 balance to a Virgin Money 0% credit card and spending £1,000 at the higher standard rate over the course of a year will be able to save about £70.
Which products will it affect?
The change will be applied September 1 across Virgin Money's products. This includes its Virgin Money Credit Card, which offers 0% for 14 months on balance transfers (2.98% fee) and 0% for three months on card purchases (typical 16.6% APR variable), plus its cash back Charity Credit Card, which offers 8.9% on balance transfers until the amounts transferred are paid off (typical 12.9% APR variable).
"Changing the order of payments is the next logical step in the enhancement of our credit card range," commented Virgin Money spokesman Grant Bather. "Our aim is to make everyone who is a Virgin Money credit card customer better off and we hope this change goes some way to achieving that."
Other new credit card rules
There are four other measures set to come into force in the UK credit card industry in January 2011. Consumers will have the right to refuse credit limit increases and reductions, to have more time to reject rate increases and the right to see the cost of their credit card on their annual statement. Finally, the financially vulnerable will have the right to access more information detailing the consequences of only making minimum monthly repayments.
Recent stories - Instant approval, legal, regulatory, privacy issues:
The Office of Fair Trading (OFT) has taken steps to address deceptive credit and debit card surcharging practices -- calling out travel companies in particular ...See Credit card surcharges
If you're looking to transfer your balance to a lower rate card straight away, or if you don't want to wait to see if you're approved for a new card, then an instant credit card may be right for you ...See Instant approval