NatWest has announced the launch of a new fixed pricing plan to pay off credit card debt. The new offer is available to Natwest credit card customers who use the mobile app to manage their account.
How does the new NatWest fixed fee plan work?
Mobile banking customers that make a credit card purchase between £300 - £3,000 will receive an offer through the app to pay a fixed monthly fee instead of the usual APR. Customers will have the option to pay the credit card debt over a term of 6, 9, 12, 18 or 24 months.
The plan can be tracked through the mobile app and can be cancelled at any time with no penalty. Customers will not be subject to any additional credit checks and can sign up without the need for any paperwork.
NatWest customers can miss one payment on the plan, but, if they miss a second payment, the remaining balance is added to the credit card and then treated as a new payment in terms of interest.
The amount that users can expect to pay each month will vary depending on how well they are managing their existing debt, the amount spent and the length of payment term selected. NatWest has confirmed that on average the plan is set to be around 10.9%.
Martin Wise, managing director of short-term borrowing at NatWest, says: “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.”
Is the NatWest fixed fee plan the cheapest way to pay off credit card debt?
NatWest's new plan is structured similar to that of a loan and is cheaper than the generic interest rate of 18.9%. NatWest does offer other credit cards, so how does the new fixed pricing plan compare?
|Credit Card||Interest rate *|
|The NatWest credit card||9.9% APR|
|The NatWest Reward credit card||23.7% APR|
|The NatWest Reward Black credit card||37.1% APR|
|The NatWest student credit card||18.9% APR**|
|NatWest Balance transfer credit card||19.9% APR (0% on spending for the first 3 months)|
* Assumed credit limit of £1,200
** Assumed credit limit of £500
N.B: The credit limit and APR is subject to change based on your credit history
As you can see, the NatWest credit card offers a lower interest rate than the 10.9% average on the fixed rate plan but is significantly lower than the APR offered on the other cards.
How to guarantee cheap credit card fees
The best way to ensure you aren't paying large amounts of interest on your credit card debt is to transfer the balance onto a 0% balance transfer credit card (if you are able to do so).
How do balance transfer cards work?
With a balance transfer, you are moving the debt from one credit card to a new credit card, usually one that offers a better rate.
Credit cards that are good for balance transfers will have an interest free period, typically between 18 - 29 months. Historically, you would usually expect to be charged a transaction fee of between 2-3%, but some lenders are now offering cards with a 0% transaction fee. Once the interest-free period has ended, the card will revert to the representative variable interest rate, usually between 18.9% and 34.99%, so it is best to make sure you can clear the balance within the length of the interest-free term.
Applying for a balance transfer credit card will result in a search on your credit file and multiple transfers over a short period of time can negatively impact your credit file.
How to become debt free
In the below video Damien explains how you can become debt free quickly whilst saving thousands of pounds in interest.