Nationwide says cardholders who break through their agreed credit card spending limit shouldn’t be charged and other rivals should follow suit
From Friday, 1 May 2015, Britain’s biggest building society will stop charging customers who exceed their credit limit following a review of the way it treats its customers. Along with this decision Nationwide will no longer apply interest to cardholders who buy goods on a zero per cent balance transfer card.
Normally when spend on a card which you have previously arranged a balance transfer, you will pay interest on your new spending. However, Nationwide has also moved to stop interest on goods bought whilst customers have a balance transfer deal, as long as you pay the balance in full at the end of the month then you won’t incur interest.
This is a regular mistake made by consumers who don’t realise the small print in the terms and conditions of balance transfer deals exclude new purchases from the zero interest deal. This error is estimated to cost customers around £110 million a year, because the customer is judged not to have paid off their balance in full because they have the outstanding debt still sitting on their card.
The building society has previously campaigned on credit cards. Back in 2011, Nationwide campaigned to ensure the most expensive debts on a credit card are paid off first, helping cardholders lower their debts quicker. The rule which became industry standard has helped millions of cardholders since its introduction which now means the most expensive debts on a credit card are paid off first.
Chris Rhodes, executive director for Nationwide group retail, says: ‘We’ve removed the fee in recognition that people do — unintentionally — exceed their limit from time to time.
‘And we’ve seen that credit card borrowers benefit from balance transfer offers but many also want to use the card for everyday spending. Historically, experts warn against this as they may end up being charged if the