Walking down the high street it’s easy to spot the abundance of banks and retailers offering you their version of the infamous credit card. It seems pretty ironic that most (if not all) boast that their deal is the best in the marketplace, while others cannot compete with the benefits or preferential interest rates on offer. The reality is that the average cardholder pays around £1,500 per annum for their plastic and nets the industry a cool £250 million per year.

What is particularly confusing for consumers is the fact that companies charge different rates for different transactions from 0% on balance transfers to 30% for cash withdrawals. In true financial services style, typically one would pay back at the lowest interest rate first, which would leave customers paying off the balance at the higher rate of interest last. In essence, this makes the company more money and means that it is ultimately more expensive for the customer to borrow.

However, to the relief of millions of cardholders, the government has recently announced that they are clamping down on this cunning behavior. Consumers are now to get the better deal and be assured that when they pay off their credit card bills they will be paying the most expensive balance off first. Unfortunately, some have predicted that there will be a downside in the form of higher charges being passed to the customer. If this holds true, it will be the consumers that lose out once again. Certainly, nice try by the government but only time will tell what the ‘real’ effect will be for consumers.