The Royal Bank of Scotland (RBS) has announced that it is to abandon credit card cheques following a public and political outcry over the ways in which they are marketed.
The announcement will also apply to RBS subsidiary NatWest. Credit card cheques are in theory intended to allow credit payment to individuals who do not take card payments.
In practice, the vast majority – around 98 per cent by some estimates – are posted out unsolicited. Critics say that the practice encourages irresponsible lending.
Using the cheques also incurs a handling fee and they are often subject to APRs of 20 per cent or more.
Goods and services bought with the cards are also not protected by the same consumer safeguards as they would have been had they been purchased on plastic.
RBS temporarily suspended issuing credit card cheques in January and previously had to actively request them before they were sent out.
Analysts noted that the results of the policy seemed to suggest that unless the cheques were sent out unsolicited, the demand for them appeared to drop to near zero.
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