Across the Pond, Royal Bank of Scotland Ditches “Naught” Percent
The Scots have their freedom! No, I’m not talking about that freedom or even this one. Thanks to the Royal Bank of Scotland (RBS), they have freedom from “naught percent” balance transfer offers, or as we Yanks call them, 0% intro balance transfer (BT) rates.
In what looks like a move out of Dudley Moore’s playbook, RBS has decided that it’s better to be honest and upfront with customers than to trick them with a “teaser rate.” With its Clear Rate Platinum Credit Card, the bank has eliminated the 0% introductory BT rate and instead offers a 6.9% variable rate on both balance transfers and purchases with no BT fee.
And RBS is not being coy about what it is doing with this card or why. A vanity URL, rbs.co.uk/fairer, drives to a landing page that features this striking statistic from Argus: “64% of credit card users end up paying interest on their balance once their 0% offer ends.” The rest of the page makes the case that RBS listened to customers, who told the bank that simplicity, fairness and transparency are very important when choosing a credit card. Fittingly, the landing page layout is open and easy to read with minimal copy and no footnotes.
RBS even has a “man on the street” video that drives home the point that the teaser rate is easily forgotten:
The point: RBS has decided that 0% introductory balance transfer rates are essentially a trick. The brand’s argument is that banks hook consumers with a low rate and rely on them to forget how long it lasts or how high the rate jumps once the intro period is over. It’s an interesting move for a bank to make. After all, RBS has offered 0% intro rates before it “found religion” this year. So giving those rates up now is a little like Don Draper quitting tobacco, and it opens the bank up to accusations of hypocrisy.
And yet – there is an element of “we heard you and we’re on your side” to this move that could engender good will. After all, much like the U.S., the UK is still emerging from a credit crisis where the big banks were painted as the bad guys. In a competitive environment, setting yourself up the honest broker is one way to break out of the 0% arms race and say, “We’re different than all the other banks.”
It’s hard to tell if this effort has been a success or not, and there’s no guarantee that RBS won’t change course in the future. Will something like this catch on in the U.S.? Not bloody likely! According to Competiscan*, 95.7% of credit card acquisition direct mail in 2013 had a 0% BT offer. Clearly “naught percent” is well entrenched on these shores, and it may be a while before that changes.
*Competiscan is a full-service, competitive intelligence market research firm that enables clients to study marketing and loyalty strategies by industry, company, product or recipient demographic. Media channels tracked include direct mail, email, online display, social media and print. Competiscan’s web-based search facility helps clients understand what consumers, business owners, financial advisors and insurance producers are viewing in the marketplace.
