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What is a Positive Payment Order?

21st February 2011

When first registering for a credit card, it can sometimes be a long and stressful process or an easy step by step one. Whatever the case, the terms and conditions tend to be overlooked and even if there was a sight glance at it, the technical terms can be frustrating and hard to understand sometimes. One might think that all they need is the basic knowledge of how the system works, but there can be some things in the terms and conditions that the user is not aware of or are somewhat hidden which can prevent them from asking follow up questions and possibly see other methods that will suit them far better than the plan they are about to choose. One of these used to be the payment order, also referred to as payment hierarchy.

Many credit card customers were caught in a Negative Payment Order. Meaning that if they were to pay off any outstanding debt, the one with the least interest, say 0% would be paid off first and would have taken priority over the ones that have a higher interest rate. Which is why it is extremely important to know what you are getting into and what you are signing especially when it comes down to banks, credit cards, or anything money related. Luckily for the UK, as of the 1st of February 2011 the Positive Payment Order has become law; it is a part of the Consumer Credit Directive, which was put in place to give the paying customer a better deal on their credit card. Allowing credit card holders to save millions of pounds a year just on interest alone.

Despite this it is heavily emphasized that the small print is read before agreeing to a new credit card. Some credit card companies in the UK, although sticking to the law, will still try and find loop holes. Such as if they offer promotion deals like 0% balance transfer and a 0% purchase deal, make sure you check how the company assigns their payments first whether by higher or lower interest rates or by longer or shorter 0% periods.

Card holders are not aware that if they do not completely settle their card balance by the end of the month, that each expense on the card could have different interest rates. The reason why the payment order matters a great deal and how it will end up saving you money is due to the varying interest rates that can be put on the card. You can rack up 17% or more on interest without even knowing. Cash advances and money transfers tend to have the highest interest rates charged on the credit card.

With this new law in place, people living in the UK are now available to become more financially secure especially in this economy where times are tough and money can be very tight at times. It can really save UK citizens a great amount of money by cutting out and pay off 28% interest just on cash withdrawals right at the beginning. Becoming more knowledgeable in your finances can really ease the mind and improve quality of health. It is always a good feeling knowing that you are saving a huge amount of money a year by with this new law in place and that credit card companies are improving their policies to help provide a better service to the public. Acquiring a credit card can be a gratifying thing, you just need to read the fine print and the details to make sure you know exactly what you are getting into and that this is the best option for you.