Credit card companies bought into line...kind of.

Credit card companies have been coming under increasing pressure to clean up their act over the last year or so, and finally it seems that change is on the way. OK, so it won't happen overnight (as the card companies have until the end of the year to make the changes) but it should mean a better deal for many card customers.

There are five major changes, one of which will force card companies to give customers 60 days' notice that they're going to raise their rates as well as the right to reject the rate rise. Under current rules, we're only given 30 days' warning. It could mean that millions of people are better off. Last year credit card companies raised the rates on over 6 million cards and it's not clear that consumers knew they had the right to freeze their account and pay off the debt at the old rate. It seems very few people did this and - as most of us don't have money to chuck around - the assumption has to be that some weren't aware they could do this.

But this isn't the only change; one that I think is more interesting will mean that credit card companies have to use our payments to clear the most expensive debts first, a complete reversal of the present situation for the vast majority of credit cards. I did a report about this for TV a few years ago and most of the people I spoke to couldn't believe that card companies chose to maximise their profits by paying off the cheapest debt first.

It meant that if you transferred your balance to another card (say, one charging 0% interest), but then bought something using the same card when it charged 18% for purchases, your payments would be used to clear the 0% balance first and only then to pay off the purchases at 18%. Of course, this wasn't a problem if you cleared your credit card balance in full or if you didn't use a balancen transfer card for purchases. But the card providers' trade body the UK Cards Association says the changes will benefit around 25% of cardholders or around seven million people.

I'm all for making a profit (even the banks and credit card companies would be allowed to make money, if I ruled the world!). But I don't think that tricks and catches are the way to go about it. This clampdown on card companies can't come a moment too soon.