Wide-ranging proposals to stop “sharp practice” by credit card companies were revealed last week by the government.

The crackdown, announced by Kevin Brennan, the consumer affairs minister, may include measures such as banning providers from paying off the cheapest debt first, as well as preventing unsolicited credit limit increases and rate rises.

Research by Uswitch, the comparison firm, found that in the past year 5.7m consumers had their credit limits changed without their agreement.

The government proposals are open for consultation until January 19 and providers will have free rein to continue squeezing customers for some time. Here we highlight the 10 most common complaints from readers about credit card sharp practice:

1 PAYING THE CHEAPEST DEBT FIRST

Credit card users are hit with hundreds of pounds in extra interest because firms force them to pay off their cheapest debts first.

Nationwide building society estimates consumers are £500m worse off every year thanks to this “adverse order of payments”. By paying off your cheapest debt first, credit card companies prolong the more expensive ones, thus earning extra interest.

Typically, when you transfer a balance to a new credit card it is at 0% interest. If you then spend on the same card (charging, say, 15.9% for purchases) you would be forgiven for thinking there would be no interest if you paid this off the following month. However, the monthly repayment is first used to pay down the original balance transfer, leaving the new purchase accruing interest.

Nearly every provider penalises customers like this. Only Nationwide and Saga pay off the more expensive debt first. Nationwide Gold, for example, has 0% on balance transfers for 13 months and 0% on purchases for three. The typical rate on purchases after this is 16.9%.

Suppose you transferred £2,000 to the card, then made purchases of £3,600 over the year. You make payments of £150 a month.

With an adverse order of payments, it would take you four years to repay the debt, with total interest of £1,315. However, if the most expensive debt was paid off first, it would take you three years and ten months with total interest of £1,128.

2 LOSS OF 0% DEAL FOR MISSING A PAYMENT

Most credit card providers reserve the right to withdraw special offers, such as 0% on balance transfers or purchases if they deem customers have breached terms and conditions. Many consumers are unaware a breach may include not making a minimum payment or going above the credit limit.

One reader, Kerry Heywood, signed up to a Virgin credit card in February because it offered 0% on balance transfers until May. As she was getting married, she needed additional funds, so she arranged a £12,000 limit. However, she went over this and realised she was no longer benefiting from the 0% balance transfer deal.

3 FORCED PURCHASES

State-backed Lloyds Banking Group offers a credit card with 0% on balance transfers for 12 months. But this is valid only if the customer makes at least £100 of purchases within the first three months of receiving the card.

This doesn’t sound like a lot, but because of the order of repayments, any money you pay after making your purchases will go towards paying off the balance transfer. You only pay off purchases after clearing the balance transfer in full.

If the customer fails to spend £100 in the first three months, they lose their 0% balance transfer deal and are charged 15.9% on the debt.

4 RATE TARTS PENALISED

Every time you apply for a credit card, a record is kept on your credit reference file. These are used by providers to assess whether they are willing to lend to you. Research from Moneysupermarket, the comparison site, found 46% of consumers did not know that making multiple credit applications might affect their score.

5 LOW MINIMUM PAYMENTS

Between 2002 and 2008, the number of people making the minimum payment increased by a third, according to official figures.

Smile’s credit card summary box shows that if you have a £1,000 purchase and make the minimum repayment of 2% of the outstanding balance or £5 (whichever is greater) on its card, which charges 20.9%, it would take 37 years and one month to clear the balance. Repay £50 each month and the balance would be repaid after two years and one month.

One government proposal is that the minimum repayment should be set at a rate of 5% of the outstanding debt.

6 INCREASING CREDIT LIMITS WITHOUT CONSENT

A growing number of card users are falling into debt because providers have increased their limits without their consent. Citizens Advice said: “We see far too many people on low incomes who have drifted into very high levels of borrowing as a result of unsolicited increases.”

7 THE 276% RATE FOR MISSING PAYMENTS BY A DAY

Peter Hall, from Norfolk, was charged £234.59 by MBNA for missing a payment by one day on a credit card balance of £1,209 — a rate of 23% for one day or 276% if annualised.

The figure included a £12 flat fee for late payment and the rest was an interest charge. After complaining, Hall was given a £150 refund.

MBNA said Hall’s interest charge was based on a previous balance of £14,000, which he also paid late and not just on the balance of his most recent purchases. This is because if a customer misses a payment due date, the balance is carried forward to the next month, even if the balance has since been settled.

It said: “When you pay in full, you receive a ‘grace period’ — up to 50 days’ interest-free on card transactions. Any time you don’t pay in full, or miss your payment due-by date, you are charged interest from the date at which the transaction shows on your account.”

8 PAYMENT DUE DATES ON A SATURDAY

Peter Morris, from Tunbridge Wells, was given a Saturday payment due date for his credit card bill. He sent a cheque to MBNA by the due date but later realised he had been charged a £12 late payment fee as the payment could not be processed on that day.

MBNA said customers using direct debit or electronic transfer would not be charged if they made a payment on a Saturday but those paying by cheque needed at least three working days for the cheque to clear.

9 BEING THRIFTY COUNTS AGAINST YOU

A growing number of Sunday Times readers say they have experienced a drop in their credit limits, even though they pay off their balances each month. Analysts suggest providers are under pressure to reduce the amount of credit available under new banking rules, and are reluctant to take on customers from whom they will make no money.

10 USELESS INSURANCE

One of the most profitable areas for credit card companies is selling insurance products alongside their cards.

John McGreevy, another MBNA customer, e-mailed to say he was charged £59 for fraud protection when his card was no longer usable. It had been blocked after a dispute in which he settled the outstanding balance in full.

THE KEY PROPOSALS

- The so-called “order of repayments” should be reversed, so the most expensive debt is paid off first.

- Introduction of a mandatory minimum payment that is higher than the typical rate of 2%.

- A ban on unsolicited credit limit increases.

- A ban on all interest rate changes on existing debts.

- Introduction of an annual electronic statement setting out the total cost of running a card.