NatWest credit card customers are being given the option to pay off their large purchases with a fixed monthly fee rather than being charged the normal credit card interest rate.
The bank says the plan – which is only available to mobile users – will always be cheaper than if a customer paid the transaction off their credit card over the same period.
Customers who make purchases between £300 and £3,000 will receive an offer through their mobile app if the purchase qualifies.
They can then choose between five repayment terms of six, nine, 12, 18 and 24 months.
NatWest says the monthly fee will depend on the customer’s credit score, transaction amount and term length.
It says the typical APR for the plan will be 10.9% versus the purchase interest rate of 18.9% on its Reward and Reward Black credit cards.
However, this is still a higher interest rate than the 9.9% APR with the NatWest Credit Card.
Martin Wise, managing director of short-term borrowing at NatWest, says: “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.
“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.”
Customers will be able to track each plan on the mobile app and cancel at any point with no additional charge.
No additional paperwork is needed for the plan and it will also not require credit scoring or a credit reference search.
Taking out a balance transfer card
If you are looking for cheaper monthly credit card fees there are a number of options.
The Sainsbury’s Bank Dual Credit Card offers 0% interest on spending for 26 months. However, you could be offered fewer months depending on your circumstances. It comes with a representative APR of 20.9% variable.
The card also offers 28-month 0% balance transfer with a fee of 3% if you make the transfer at application.
It lets you collect Nectar points whenever you shop. You could earn 750 bonus points each time you spend £35 or more on Sainsbury’s shopping with your credit card, up to ten times in your first two months - that’s a maximum of 7,500 points.
Barclaycard will give you 27 months at 0% on purchases. It has a 1.75% fee and a representative 19.9% APR. It also comes with 0% on balance transfers for 27 months.
Tesco Bank is offering 0% on purchases for up to 26 months with an APR of 19.9%, depending on your circumstances.
NatWest’s balance transfer card will also give you 0% on purchases for the first three months and comes with an APR of 19.9%.