'BT to launch credit card'
July 5, 2007 at 9:35 am
BT is the latest non-financial institution to jump on the plastic bandwagon and offer their customers credit card facilities. The card will be automatically linked to the customer’s telephone and broadband account, with a reduction made to the bill each time the card is used. This follows market research carried out by BT which shows that consumers prefer financial benefits automatically bestowed on them, rather than accruing points and then having to redeem them for a gift or something similar. Customers with BT credit cards will earn 0.5 pence for every £1 they spend on the card up to £250. Above this level customers will earn 1 pence for every pound spent. This accrued credit will be redeemed against the customer’s telephone and broadband bills. The maximum saving one can make is £75 per year. This would require a total spend of £7,625, or £635 per month, considerably above many people’s credit card bills. A more modest spender who ran up a bill of £250 a month would earn £1.25 to use against their phone bill, or a whopping £15 per year. If you are the type of card user that comfortably pays your bill every month without fail, then you may consider these savings as a way of saving an extra bit of money. However, if you may struggle to pay your bill, and then consider that you will pay 1.5 pence monthly interest for every £1 unpaid, the savings you make on your phone bill begin to pale into insignificance.
Gavin Patterson, managing director at BT Retail, was understandably talking up the strengths of the card, calling it “…the obvious choice for millions of BT customers”. The card is offering very competitive initial interest rates of 0% on balance transfers and 0% on card purchases for the first 12 months, which then changes to the standard rate of 16.9%. The other major strong point of the card is that multiple card holders at the same address can save money on the same account, so if a husband and wife with the same internet and telephone account both used BT credit cards, they could both be contributing to savings on their bill. This shows how serious BT are about reinvigorating their customer base, which they have seen seeping away throughout the years due to uncompetitive pricing and poor customer service. A spokesperson for (yet another) price comparison website simplyswitch.com] commented: “It is quite rare to find any reward scheme operating on a card with 0% balance transfers. This is a strong indication that BT is pushing the boat out to retain its existing customers.”
However, BT seems to have missed a trick by punishing their customers who want to pay their BT bills with this credit card. BT charges an extra £4.50 per quarter to those customers that choose not to pay by direct debit, a bizarre policy that has attracted criticism from consumer groups.
