Credit Card Overview
Fact: there are more credit cards than people in Britain and the country's debt problems are amongst the worst in the world.
When choosing a card provider, its policies on responsible lending and debt advice provision are of key importance. The green and ethical concerns you bring to who you bank with, concerns about equal opportunities or the environment, are just as applicable to who you get your credit card from.
This section also looks at the green or ethical worth, as well as the practicalities of charity affinity cards.
Does your credit card provider treat its customers responsibly?
What are charity affinity cards and how do they work?
Does your credit card provider treat its customers responsibly?
Responsible lending
According to the British Banker's Association (BBA), responsible lending means 'providing credit, based on background checks and professional judgement, to people who can accommodate repayments without getting into financial difficulty'. As the sheer number of people in debt today shows, these principles are not always well applied by credit lending institutions. In 2008 our credit card debt hit £54.4bn and continues to rise.
Transparency is key - credit card customers should be presented with the terms and conditions attached to their card up front and in plain English. It is important to check whether your provider has a responsible lending policy in place, and how it is implemented if it does exist.
Debt management
Credit card debt is all too common in the UK. Some financial institutions offer basic in-house debt advice services, the scope of which can vary greatly. Often providers will refer customers to free advice services including the Consumer Credit Counselling Service, the Citizens Advice Bureau and others.
Use our search tool to find details of your provider's debt management services. Information on this subject can be found under 'Responsibility toward Customers'. Alternatively contact your provider directly for further information.
What are charity affinity cards and how do they work?
Affinity card providers make a small donation on behalf of the card holder to the charity it is associated with.
Such charity donations average around 25p per £100 spent. So, in order to donate £100 to your charity of choice you'd have to spend £40,000 with the card. Most providers also make a one-off donation of between £5 and £25 on each new card account.
In their analysis of charity affinity cards moneysavingexpert.com suggest that a more effective way to donate money is to use cash back cards. Cash back cards operate in much the same way as affinity cards except that instead of a charity, additional money goes to the card holder and this money is usually considerably more than a standard charity card donation. The cash back card holder can then donate the money they have earned to the charity of their choice and if eligible, Gift Aid it, so rather than £1 the charity will receive £1.28. Donations on affinity cards are not eligible for Gift Aid.
View the range of charity affinity cards available on the market click here.
Your next steps
See our guide Next Steps - Credit Cards for more suggestions on how to find out about your credit card provider's green and ethical policies, how to contact them and how to find the right credit card for you.
Credit Card Search
Credit Card Provider
NatWest
Green/Ethical Products
- Carbon offset payments
- Basic Bank Account
- Foundation Account (business account available 'regardless' of credit standing)
Ethical Lending or Insurance
While the parent company, the RBS Group, does not have a broad, group-wide ethical lending policy it does have the following:
- Global lending and project finance for corporate customers (i.e. the Equator Principles are applied in project finance decisions)
- Ethical Code for Suppliers in line with the UN Global Compact principles (human rights)
The Group’s Sustainability Team manages all Corporate Responsibilities at executive level, including assessments of social and environmental impacts of the lending policy.
Responsible Lending
1. Credit Lending
NatWest currently offers LTV (loan-to-value) mortgage rates up to 90%. This compares favourably with the FSA’s Turner Review suggestion of a maximum LTV of 90%, i.e. the borrower should have at least a 10% deposit.
The LTI (loan-to-income) rate is not specified. The bank states that it uses an affordability assessment in making loan decisions but information on the factors considered or limits imposed are not made publicly available.
The bank uses information from credit reference agencies as well as behavioural and credit scoring techniques to assess secured and unsecured credit applications.
The bank does not have a policy to avoid making unsolicited increases to customers’ credit limits.
2. Debt Warning
The bank issues a generic warning to mortgage customers: ‘Your home may be repossessed if you do not keep up repayments on your mortgage.’
For credit card customers it states: ‘All introductory offers are conditional on you paying on time and staying within your credit limit.’
Though it does not refer customers directly to the FSA’s Debt Test, the RBS MoneySense website features a debt test that 'helps you find out whether you have - or are likely to have - problems with borrowing'.
3. Debt Management and Advice
With regard to mortgage customers experiencing difficulty making their repayments the bank says it will:
- Contact the customer ‘as soon as possible’ to discuss their problem
- Talk to debt advice agencies (e.g. Citizens Advice) and will act on the customers behalf if requested
- Give customers ‘reasonable time’ to pay back the debt
- Look at arranging a new payment plan with mortgage customers
- Consider changing the way the customer makes their payments or the date they are made
- Consider allowing the customer to pay back their mortgage over a longer period of time, thus reducing monthly payments
- Look at changing the type of mortgage
The bank outlines the possible steps involved if they move to repossess the customer’s home.
No similar assistance was found for customers with difficulties related to unsecured credit.
Evidence indicates NatWest offers payment holidays to offset flexible mortgage customers, however there is no policy statement, timeframe or circumstances outlined. Payment holidays are not offered on personal loans.
The bank states that it offers advice on re-housing for customers and makes customers aware of advice agencies such as Shelter and the Citizens Advice Bureau. However, it is unclear whether this advice extends beyond the provision of the organisations contact details to customers facing repossession.
Financial Exclusion
NatWest provides a basic bank account to low-income customers. It also offers special accounts to Polish immigrants.
In terms of access provisions, NatWest installed hundreds of ATMs in deprived and rural areas in the UK. The bank also provides services via mobile banks in some remote areas.
A new product, the Foundation account, was developed for customers without a strong credit history who intend to open small businesses.
Environment
According to its Corporate Responsibility report the RBS Group obtained all its UK and Ireland contracted electricity from renewable sources in 2007 and has made a significant investment in improving its energy efficiency as well as showing an ongoing commitment to the improvement of its environment performance specifically where it concerns energy efficiency and reducing carbon emissions.
However, similar commitments regarding waste management were not found.
Carbon Neutral
The Group’s stated goal is to reduce carbon emissions per employee in the UK and Ireland by 20% from 2006 levels by 2011. No pledge was found to become fully carbon neutral.
Equal Opportunities
The Group’s diversity policy addresses the key areas of gender, race, disability and sexuality.
Women on the Board
5.88% of parent company, RBS's, board members are women (2007).
Voluntary Standards & Initiatives
The parent company is a signatory/member of:
Charitable Giving
The parent company, RBS donated 0.38% of its pre-tax profits in 2007.
NatWest
- Current Accounts
- Savings
- Investments
- Credit Cards
- Loans
- Mortgages
- Insurance (Home, Motor, Travel, Life)
- Students Contents Insurance
- Students Current Account
