Teaser rate debt traps banned with launch of low rate credit card

Teaser rate debt traps banned with launch of low rate credit card

NatWest and RBS are taking all teaser rate credit cards off the shelf for new customers from Monday 17th March 2014 and launching a new Clear Rate Platinum Card.

The average holder of a 0% balance transfer card has around £9000 in debt across multiple cards

  • NatWest and RBS are breaking the mould in banning 0% balance transfer and purchase rates.
  • Research shows two thirds of the market don’t switch their card before they hit a payment wall and often don’t pay down their debt.
  • The average 0% balance transfer card holder has £9000 on multiple cards, and increases that debt rather than paying it down.
  • NatWest and RBS aim to earn customers trust by launching new Clear Rate Platinum Credit Card.
  • RBS CEO, Ross McEwan, announced at the end of February that as part of its strategy to be a much simpler bank to deal with, that earns customers trust, the bank will no longer be in the business of offering teaser rates and trapping people in debts they cannot afford.

Credit card market data shows that two thirds don’t switch their 0% card before they hit a payment wall and often their rates hike to over 20%. They’re also often paying a purchase rate of around 18% or more for the period. This, together, does not help them manage their debt down over time.

Doing the right thing for customers

Moray McDonald, Interim Head of Products and Marketing, said: “We’re hunting through everything we do across the bank to make sure we are doing the right thing for our customers. The credit cards industry is absolutely dominated by teaser rates, trapping people into a spiral of debt that they never pay down; it’s not good for our customers, and it will play no future part in this bank. Removing these teaser rate debt traps, and launching a new transparent, low rate credit card will be a big step towards earning back our customers trust.”

The average holder of a 0% balance transfer card has around £9000 in debt across multiple cards and does not pay down that debt over a 0% period, in fact, over time, they increase it.

36% of people who keep their balance on the 0% card for 7-12 months after the deal has expired, with an average balance of £2,403, pay about £360 in interest.

The Clear Rate Platinum Credit Card, which launches tomorrow, has one low rate of 6.9% for transferred balances and new purchases and an upfront, transparent annual fee of £24. This is a step change in a market where customers are subject to fees of up to 3% when they switch their balance and high purchase rates.

This is the first of a number of commitments Ross McEwan laid out at the end of February, RBS and NatWest will:

  • Stop offering deals and products to new customers that we are not prepared to offer our existing customers.
  • Stop offering different rates to customers who apply online, in branch or by phoning our call centres.
  • Use simple language in customer letters, on websites and in branches.
  • Put business bankers back on the high street.
  • Cut in half the number of personal and SME products on offer by the end of this year.
  • Cut how long it takes to open a personal current account from five days to next day by the end of this year.
  • Improve the process to open a personal current account online so customers can upload their identification, such as their passport, and open their entire account from home.

This information is for media use and is not a financial promotion.


  • Based on our own data we estimate that an average ‘revolving’ customer, who makes the average repayment each month, and has the average revolving balance of £2,175, based on the average APR of 22.7%, will save £310 over the life of their balance and reduce their payment term by 10% with the new 6.9% clear rate card.
  • At least 51% of customers offered a Credit Card will receive our lowest 6.9% APR. For other customers, the effective rates for purchases, balance transfers and money transfers will all be either 9.9% p.a. or 14.9% p.a. A customers’ APR will be reviewed annually and could go up or down between these three rates.
  • As well as launching a low rate card we’re introducing an online tool on our customer websites that will allow customers to work out if the Clear Rate Platinum Credit Card can help save them money.



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