Nationwide launch Select credit card... for a select few
NATIONWIDE are rewarding thousands of their most loyal customers with a new cash back credit card.
The Select credit card will be sent out, unsolicited, to a select number of customers who already have a Nationwide credit card and use the building society's Flexaccount as their main current account.
But the move has already attracted controversy: first, from those concerned that sending out unsolicited credit cards will encourage vulnerable consumers to borrow and second, conversely, from those annoyed that they haven't received a Select card despite meeting the criteria.
The launch of the Select credit card is just one in a long line of changes Nationwide have made to their reward schemes in the past year.
The 0% use abroad offer for debit cards was withdrawn last summer and replaced with free European travel insurance for those using the Flexaccount as their main current account, for example, driving customers towards applying for a 0% use abroad credit card instead.
The approach must be working, though: Nationwide nabbed nearly 173,000 new credit card customers in the year to May 2011.
More about Select
Select credit cardholders will be able to earn at a 0.5% cash back rate on all purchases and double that in the first three months of card membership.
Cash back can only be earned on sterling purchases but, in a grand gesture from Nationwide, use abroad with the new credit card will be foreign transaction fee free.
It doesn't quite beat the leading deals on cash back or even the best deals for travel but, considering they're getting the deal out of the blue, there's more than enough to please most Nationwide customers.
Who'll get one?
At first, it appeared that all Nationwide credit card customers using the Flexaccount as their main account - that is, paying in at least £750 a month - would get a Select credit card.
However, after speaking to Nationwide in more detail, it became clear to us that this was not the case: only some credit and current account customers would receive the card and some even reported receiving a card even though they paid less than £750 in each month.
That initial confusion accounts for much of the annoyance from Nationwide customers, detailed below.
However, Nationwide did confirm that among those to have their cards upgraded would be those with offers no longer available to new customers: the Gold, Classic and Cash Reward credit cards.
In the case of the Cash Reward credit card, that meant that some customers would start earning cash back at double the rate they do now.
Cardholders' interest rates will stay the same, Nationwide promise.
Rewarding existing customers in order to encourage them to spend more on their credit cards, lucrative behaviour for the provider, is known as proactive credit card marketing, which as we discuss here, is often criticised.
Discount reward sites, of which Nationwide has offered, are another example.
Encouraging consumers who may be facing financial difficulty to undertake more borrowing amounts, critics say, to an irresponsible lending practice.
However, card providers beg to differ.
They say that they carefully avoid sending out marketing materials and credit cards to the most vulnerable consumers and even to those who may have trouble making repayments in the future.
For Nationwide's part, criticism led them to add the following line to their responsible lending guidance: We'll always consider if you can afford the minimum repayments before upgrading your card [to Select].
How far they can actually tell that, however, remains to be seen.
Difficulties getting the card
On the other hand, many consumers got in touch to tell us that they were dissatisfied with the way that Nationwide gave out the credit cards.
One man got in touch to tell us he was notified that he'd receive a Select credit card but, after making further enquiries, would have to wait two months to receive it.
Many other people reported being told they'd get the card but then hearing nothing more for months.
A Choose team member who was eligible for the card found similar confusion when they called Nationwide to find out whether they'd receive the deal: call centre staff hadn't heard of Select and, when they asked a line manager, still couldn't tell them whether they'd get one.
All in all, what should have been a good reward for loyal Nationwide customers - for those that wanted it, of course - seemed to be let down, for some customers, by poor planning.