NATWEST will offer credit card customers an interest-free repayment plan for expensive goods.
From today, customers can opt to pay off large purchases through an instalment plan rather then being charged normal credit card interest rates.
1 NatWest will offer credit card customers a 0 per cent interest repayment planCredit: Alamy
The bank promises that the plan will always be cheaper than if a customer paid off the credit card debt over the same period paying normal rates.
Customers will be notified via the banking app if an item qualifies for a payment plan only after they’ve bought it.
For purchases worth between £300 and £3,000, customers will be able to choose between five options to pay off the debts in six, nine, 12, 18 or 24 months.
If you do opt for the cheaper service, you’ll be able to track your repayments via the app.
How to cut the cost of your debtIF you’re owe a lot of money, it can be really frightening. Follow these tips to take action and start dealing with your debts.
Don’t bury your head in the sand – Check your bank balance at least once a week. Understanding how you spend is the first step towards managing your finances.
Start budgeting – write down your weekly income then deduct essential bills such as food, energy, commuting and council tax.Whatever is leftover is your budget for the month. Set aside a chunk to pay down your debts and work out what you’ll spend and save.
Cut costs – look at ways you can cut your expenditure such as switching energy provider or swapping from named brands to supermarket essential options.
Overpay your debts – The more you pay off the less interest you’ll pay over time. This is espeically through for credit card debts. With loans or mortgages check first as there may be a mximum you can overpay.
Prioritise – Things like rent or mortgages, council tax and energy bills may have serious consequences if you miss the payments.If you can afford to overpay, make sure you target the highest interest rates first.
Get advice – If you can’t afford what you owe – don’t panic, there’s plenty of free help available!Contact debt charity Stepchange, Citizens Advice or the National Debt helpline where experts can talk you through your options.You can also get help to prioritise debts and negotiate with creditors to set up affordable payment plans.
You can also cancel the plan on the app too if you decide that it’s not for you without being charged a penalty fee.
The repayment plans will only be offered to NatWest credit card customers and won’t reduce the debt but it will stop the amount from growing due to interest rates.
Of course, you should only opt for the plan if you know that you can afford to keep up with the monthly repayments – this might be more than the minimum charge.
It won’t affect your credit score either, and you don’t need an extra credit reference either.
You can have up to four plans on the go at any one time but remember that you will still need to pay interest on credit card spending that’s outside the plan.
It will automatically be cancelled if you miss two payments and then the amount will be subject to the same interest rates you normally pay.
Martin Wise, Managing Director of Short Term Borrowing at NatWest, said: “Our Credit Card Instalment Plan gives customers an alternative way to pay off a large purchase in a simple and flexible way in our mobile app.
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“We want to encourage our customers to take greater control of their borrowing, so when they told us they’d like more options for paying off larger purchases on their credit card, we created a product that gave them more options but also greater value, transparency and flexibility.”
Zero per cent purchase credit cards work in the same way as a loan but you don’t have to pay any extra charges for up to 28 months. Check out our guide to the best ones here.
You can also get 0 per cent balance transfer cards which can help you save up to £300 off your store card balance.
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