Credit card scrapped for 70,000

By Paul Lewis
BBC Radio 4's Money Box

IF said it is uneconomical to continue operating the credit card

Internet bank Intelligent Finance is closing down its unique 'offset' credit card.

Its 70,000 customers have just four weeks to move to another Intelligent Finance (IF) card, find an alternative, or repay any outstanding balance.

The offset card allows customers of the Halifax Bank of Scotland subsidiary to set any credit balance in a current or savings account against their debt, which reduces the monthly interest charged.

Nick Robinson, Managing Director of IF, told BBC Radio 4's Money Box programme it has become too expensive to run the card any more.

"It has become uneconomical for small card players like ourselves to operate their own IT systems," he said.

"There are massive economies of scale and things like Chip and Pin have served to accelerate that."

Angry customers

Customers like Jane, from Hereford, are not impressed. She told the programme:

"It is a large enough organisation. They are causing inconvenience for the users of these cards because they cannot solve technical problems that other banks have been able to resolve."

I can empathise with customers expressing inconvenience Nick Robinson, IF

Other customers, like Katy, told the programme IF had reneged on its deal:

"I am very annoyed. I took out these products in good faith.

"They are all interlinked, and to withdraw one of them at short notice risks rushing customers into taking a bad financial decision."

Nick Robinson said IF has tried to ease the transition.

"I can empathise with customers expressing inconvenience," he said, "but we have designed what we think is a best-buy credit card to move onto.

"The vast majority of our customers were not using the offset facility, so very few will be losing that benefit.

"We are giving all of them the opportunity of 0% balance transfer and 0% on new payments. I think that is pretty fair."

Notice period

Mr Robinson confirmed that an existing IF balance could not be transferred at a 0% rate. That would be charged at the standard 12.9%.

It is always a tricky decision when the right time to mail customers is Nick Robinson, IF

And he agreed some customers would move to a competitor to get 0% on the balance.

"They could have done that before. But for some of them they may do that definitely," he said.

He also told the programme he had given customers the right notice even though IF had been aware of the problem for three years since Chip and Pin was announced.

"We were aware of this back from that date and have been working on what would be the best solutions," he said.

"It is always a tricky decision when the right time to mail customers is.

"If you mail them too early, the mail just sits there. If you mail them too late then people are inevitably upset.

"We chose a six to eight week timeframe to give them as much notice as possible without pushing it so far they wouldn't do anything with that mailing."

BBC Radio 4's Money Box was broadcast on Saturday, 11 June, 2005, at 1204 BST.

The programme was repeated on Sunday, 12 June at 2102 BST.