7 January 2016

Designing products in line with our Ethical Policy

One of the five pillars of our expanded Ethical Policy is a commitment to developing ethical products and services that reflect the values and ethics we and our customers believe in. We're doing this by involving our customers in the design of our products to ensure that they are fair to customers and meet their needs.

Using this approach, we initially launched a new overdraft tariff that provided a simpler charging structure and reduction of fees, co-created with our customers. Our latest product is a simple, fair and transparent Balance Transfer Credit Card.


The Balance Transfer Credit Card

Following consultation with our customers, The Co-operative Bank has launched a new balance transfer credit card which does not penalise customers by withdrawing the promotional zero per cent offer when they make small mistakes.

Typically with other credit card providers, balance transfer credit card terms and conditions include the right to remove the zero per cent promotional offer if their customer makes a late payment, misses a payment or goes over their credit limit.


Our Balance Transfer Card was developed in line with our Ethical Policy


Speaking about the new card, Matthew Carter, Products and Marketing Director at The Co-operative Bank, said: "A balance transfer credit card is an effective way to manage debt and cut the cost of borrowing. Yet, many cardholders never really benefit from these headline promotions as small mistakes prove costly, even though they have paid a fee for the benefit.

"We developed this credit card after consultation with our customers, they told us that they didn't want to be disproportionally penalised for small mistakes. They expect to be charged a small fee for not adhering to the terms and conditions, but they don't expect to lose all the benefits on a card as a result."1

For more information on the Balance Transfer Credit Card, click here.


Research into balance transfer credit cards

As part of the launch of our new Balance Transfer Credit Card, we researched people's experiences of using balance transfer credit cards.2 The results showed that a quarter (25 per cent) of the 15.6 million Brits who have taken advantage of a zero per cent balance transfer credit card in the last five years have fallen foul of the terms of the offer, and had the promotional zero per cent rate withdrawn early as a result.3 The research went to reveal that:

  • On average consumers who make a mistake lose the zero per cent offer just four months into the deal, however, 22 per cent of these card-holders didn't even experience one month of zero per cent interest as the promotion was withdrawn.
  • Small mistakes are relatively common, almost a third (29 per cent) of credit cardholders with a balance transfer promotional offer admitted making them.
  • 37 per cent of cardholders who have, or have had, a balance transfer card were not aware that the card provider could remove the promotional rate if they missed a payment, while a third were unaware it could be removed if they exceeded their credit limit.
  • Two-fifths of people who have lost a promotional offer took out a loan to help meet their repayments, 38 per cent dipped into their savings to cover the rising cost and 38 per cent turned to their overdraft.


Matthew Carter, Products and Marketing Director at the Co-operative Bank, said: "Our card should enable customers to utilise their zero per cent rate for as long as possible and not lose out because of minor errors, we designed this card to be different from many others on the market.

"As stated in our Ethical Policy - to create products with customers at their heart - this credit card is simple, transparent and fair, giving customers more control over their finances."


The future of ethical products and services

Our Ethical Policy states that we will create products with customers at their heart and the new Balance Transfer Credit Card is designed to be simple, transparent and fair, giving customers more control over their finances. Look out for more new products in the future designed in line with our Ethical Policy.


1. Cardholders should be aware of their Ts&Cs and take action to minimise the likelihood of missing, or making, a late payment by setting up a direct debit for at least the minimum amount. You will be charged a late payment fee on any late or missed payments and your credit rating could be affected. See account charges.
2. The study was carried out for The Co-operative Bank by Opinium amongst 2,003 UK consumers between the 27th and 30th of October 2015. Of these, 1,528 consumers own/have owned a promotional balance transfer credit card in the last five years.
3. Equates to 31 per cent of the UK population (50,909,000 ONS 2014).