Government proposals to cut debt sentence

For example, on a typical balance transfer credit card*, with a balance transfer of £2,000 and a purchase of £1,500, using the newly suggested positive hierarchy system ,with a minimum payment of five per cent, consumers would pay off their debt in nine years and nine months and would incur £802 in interest.

The same amount of debt would take 24 years and three months to pay off and would rack up £3,175 in interest using the current typical negative hierarchy system with a 2.5 per cent minimum repayment.

Peter Harrison, credit cards expert at, said: "Our own research shows that almost two-thirds of consumers don't realise that the cheapest debt is paid off first on the majority of credit cards. The lack of understanding of the current repayments hierarchy system by consumers means many end up paying a huge amount of interest and the debt sentence can last for years - decades in some cases.

"These figures show the extent to which the Government's proposed reforms will help consumers lower their personal debt.

"However, consumers shouldn't wait until any changes take place. If you are trapped by payment hierarchy then switch to a more suitable card, or if you are paying just the minimum amount on your card, then look to increase your payments, if possible."