NatWest now allows credit card users to swap their purchase APR for a cheaper monthly fee… but it’s only open to mobile users
- Those who spend between £300 and £3,000 can make the fixed monthly offer
- NatWest says the rate varies but will always be the cheaper than the card’s APR
- Users can choose to pay off purchases over six, nine, 12, 18 or 24 months
- Some cards offer introductory 0% purchases, is NatWest’s any good?
Customers looking to make big purchases with a NatWest credit card will be able to pay a set monthly fee rather than the card’s APR, under a new mobile-only offer announced by the bank.
Those who make a purchase between £300 and £3,000 and use mobile banking will be able to make fixed monthly payments over a time period of their choosing.
They can choose to pay off the cost of the purchase over a period of either six, nine, 12, 18 or 24 months, and are able, in-app, to compare how much they will have to pay each month before choosing.
NatWest has announced a way for customers to pay off credit card purchases that’s cheaper than their standard APR – but it’s only open to those who bank on their mobiles
The bank says the move ‘gives customers more choice over how they manage their borrowing by providing a flexible way to pay purchases’, and that the plan will ‘always be cheaper’ than if a card holder paid the transaction off their credit card over the same period.
It forms part of a customer’s existing credit limit and so does not require any additional paperwork.
NatWest says how much customers pay each month depends on a customer’s credit history, the size of the purchase, and the term length.
It says though that the typical APR for the plan will be 10.9 per cent, lower than the purchase APR of 18.9 per cent offered by its Reward, Reward Black and Balance Transfer credit cards.
However, it is worth noting that 10.9 per cent is slightly higher than the 9.9 per cent APR on purchases charged by NatWest’s basic credit card.
NatWest’s new plan works a little like New Zealand pay later start-up Laybuy, which arrived in the UK in March.
That allows users to spread the cost of an initial purchase over six separate weekly instalments, though Laybuy doesn’t charge interest unless you miss a payment.
Users of NatWest’s new plan will be able to miss one payment, but if you miss a second payment the plan will be cancelled, your outstanding amount will be moved back to your credit card balance and treated as a new payment when it comes to interest.
Is there a cheaper way to pay?
While NatWest’s offer works slightly differently to how repaying a credit card purchase usually functions, those looking to pay off a new sofa or TV without incurring interest do have options.
Quite a few credit cards offer introductory 0 per cent terms on purchases, meaning you do not have to pay interest or any charge on your spending providing you pay it off within the set period.
NatWest’s own balance transfer card, for example, gives you a three-month term where purchases incur 0 per interest, and doesn’t require you to use mobile banking.
While NatWest gives you a maximum repayment period of 24 months, Barclaycard’s Platinum card gives you 0 per cent interest on purchases for a full 27 months from the date you open your account.
The advantage of NatWest’s offer is that the term is specific to each purchase you make, which means that if you took out the Barclaycard and then waited six months before you made a big purchase you would only have 21 months left of the introductory offer.
It comes with an APR of 19.9 per cent and also gives you 0 per cent on balance transfers for 27 months.
Sainsbury’s Bank’s Dual Offer Credit Card offers you 0 per cent interest on purchases for up to 26 months and also on balance transfers, though that does come with a heftier APR of 20.95 per cent on purchases.
You can also earn up to 7,500 bonus Nectar points in your first two months.
M&S Bank’s Shopping Plus Mastercard gives you 0 per cent on purchases and balance transfers for 20 months, and gives you one M&S point for every £1 you spend on the card.
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