Nationwide Building Society has welcomed the warning by Which? about the hidden cost of adverse order of payments on credit cards. Credit card providers have for some time operated adverse order of payments without making it clear to their customers or explaining the impact.

Jeremy Wood, divisional director for banking and credit cards at Nationwide, said: "Nationwide has long-campaigned for a positive order of payments for all credit card customers as an adverse order of payments costs consumers £500 million every year. Many credit card providers use low introductory rates to lure people into opening an account.

"These offers can look 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 unknowingly more expensive for consumers but more profitable for the credit card providers.

"More than two-thirds of credit card holders do not know how their payments are allocated. With a complex issue such as order of payments, providers have a duty to explain clearly to consumers how the way payments are allocated impacts on their efforts to decrease their credit card debt."

Order of Payments (or OOPs) is the sequence in which credit card bills are paid. Nationwide always makes sure the most expensive debt is paid off first. Other credit card providers pay off the cheapest debt (usually balance transfers) first allowing interest to continue accruing on purchases and cash advances.