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December 4, 2007

New Year shock for RBS credit card customers

by Gill Montia

Story link: New Year shock for RBS credit card customers

Two leading credit card providers are reducing the interest-free period available to cardholders who settle their balance each month, in full.

From 1st January, many NatWest and Royal Bank of Scotland (RBS) customers will discover that they now have days, rather than weeks, to pay credit card bills and avoid interest payments.

RBS cardholders currently have around 25 days from the date a credit card statement to the due payment date and this period is being reduced to 15 days. NatWest, which is a subsidiary of RBS, is applying the same time limit.

RBS has advised all cardholders (11 million in total) of the new terms and conditions, however, the details of the changes, which only affect RBS, NatWest and Mint cardholders who clear their credit card balance in full each month, are buried in the small print.

Credit card bills frequently take up to five days to arrive by post and payments must be made in time for cheques or electronic payments to be cleared by the due date. This could give someone paying by cheque only three days to settle the bill.

In addition, those failing to make at least the minimum payment on time will be liable for a £12 penalty charge.

According to Mike Naylor of uSwitch, the price comparison website, the action by RBS is part of a wider move by credit card companies to increase revenue by introducing “stealth” charges.

Whilst agreeing that shortening the payment period will save the bank money, Mr Naylor points out that: “It is essential that the bank is transparent about these changes and communicates with customers clearly.”

Consumers who regularly draw out cash on their credit cards may actually benefit from the change as an earlier settlement date means they will be charged interest for a shorter period.

For those seeking a longer interest free period than will be permitted by RBS, NatWest and Mint in the New Year, Halifax and Bank of Scotland offer up to 59 days before interest is charged on many of their cards.

Britannia and Dunfermline building societies, Clydesdale Bank and the Think and Clear Visa cards from the Co-operative Bank are also generous in this respect.


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