Credit card cheques to be banned
by Gill Montia
Story link: Credit card cheques to be banned
The Government will today announce that credit card cheques are to be banned, in what will be regard by many as a long-overdue move.
The injunction will form part of new consumer protection measures, further details of which will be out shortly.
Consumers typically receive the cheques with their monthly credit card statements.
They work in the same way as a normal cheque and according to providers are a useful means of paying for goods and services where credit cards are not accepted.
However, the interest rate for debt on a credit card cheque is often far higher than for a normal credit card purchases.
According to reports, the new measures aimed at protecting consumers during the recession will also oblige credit card providers to clear an account holder’s most expensive debt first.
The so called Order of Payments (OOP) system operated by UK credit card providers has been confusing consumers for some time.
OOP refers to the sequence in which a credit card bill is paid; for the consumer it is advantageous to have the most expensive debt paid first whereas for card providers the reverse is true.