Royal Bank of Scotland withdraw credit card cheques

September 4, 2006

By Peter Kenny

Royal Bank of Scotland withdraw credit card cheques The Royal Bank of Scotland has announced they will withdraw all credit card cheques. Many financial experts have increasingly condemned credit card cheques while the government has already launched an inquiry into their use, with a decision due soon.

Cardholders are sent credit card cheques, which are very often unsolicited. The major cause of concern is the fact that many consumers do not realise the financial implications of using a credit card cheque.

By using a credit card cheque the consumer is charged interest from the point of purchase, unlike a credit card, where an interest free period, often up to 56 days is allowed. To make matters worse purchases paid for by a credit card cheque are charged a higher interest rate than the normal APR of the credit card.

There are currently 11 credit card issuers who also send out credit card cheques with Barclays, HBOS and MBNA among them. The Royal Bank of Scotland along with NatWest temporarily withdrew credit card cheques earlier this year. Their decision to permanently withdraw the cheques has been welcomed by financial experts.

A further legal drawback in the use of credit card cheques is that they do not offer the same protection as a credit card. Under the consumer act any one making a purchase with a credit card is protected up to £100 of the sale. The consumer can then claim directly against their credit card company if there is a subsequent problem with the item bought. This allowance is not applicable to any purchases made with a credit card cheque.