RBS bars its credit cards to non-bank customers

Disconnected: all cards are affected by the ban except those for the highest rollers

11 April 2012

NatWest-owner Royal Bank of Scotland (RBS) today slammed its doors closed to credit card customers who do not currently bank with the group.

Analysts said the UK's second-biggest card provider was trying to limit the danger of taking on customers who cannot repay their debts, and said other banks could follow.

Only 18 months ago, banks were heavily promoting credit card deals to lure new spenders.

But now taxpayer-owned RBS is limiting its credit cards, which regularly feature in best buy tables, to existing customers.

Experts today slammed RBS for limiting customer choice, but predicted that other banks could follow.

"This is a bold move from RBS," said Louise Bond, of price-comparison site uSwitch. "It minimises the risk for the bank but limits consumer choice. Although it will help the bank know more about applicants — as current account customers, RBS will have far more data available than a credit report could provide — the bank is effectively putting off a huge number of potential new clients.

"RBS and NatWest credit cards are huge players in the market, and potentially other banks will follow suit."

Currently more people in the UK use RBS cards for spending than those from the Lloyds Banking Group stable or HSBC. Banking experts said RBS and NatWest's joint offering makes it the second-biggest player in the credit card market after Barclaycard.

The bank itself seemed confused about the changes to its credit card application terms, with some call centre staff saying they were unaware of the new restrictions.

But apart from the group's "black" card and private banking service which is today still available to new, high-income customers, spenders wanting to open a new credit card with RBS will now have to open one of its current accounts. Most of these pay 0.1% interest on in-credit funds and charge around 19% on overdrafts. Bond described this as "uncompetitive".

Today's news will come as a particular blow to the so-called "rate tarts", who regularly switch bank accounts to track down the cheapest interest rates.RBS and NatWest were both promoting the market-leading balance transfer deal, the Platinum card, which offers 0% interest rates for 15 months on debt moved from other accounts.

NatWest confirmed the move and said that it would help them focus on existing customers.