'Irresponsible' Nationwide credit card reward slammed

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Instead - consumer blog Bitterwallet revealed this week - many Nationwide customers were enraged.

The building society's promotion credited the accounts of some of their credit card customers by £20.

But there was a catch - those Nationwide credit cardholders in line for the cash could only keep the money if they spent at least £1,000 on their cards during May and June.

Many customers described the offer as a sneaky and underhand move that will encourage people to spend on credit beyond their means.

Default on the credit card payments after a building society endorsed overspend or even simply fail to pay back the credit card balance in full at the end of the month, they argue, and cardholders will end up having to pay much more than £20 in charges.

Nationwide response

However, Nationwide defended the deal in a statement, pointing out that customers have no obligation whatsoever to spend the £1,000 and that the offer was no different to that proffered with many cash back deals.

"This promotion was about encouraging existing customers to use our account as their main account and is similar to cash back rewards that many card providers offer," they said.

"For example, £20 reward on £1,000 spending is equivalent to 2% cash back. All customers selected for this promotion had the required available credit of £1,000 within their existing credit limit and we did not extend any credit limits."

As avid readers of Bitterwallet, we were unsurprised to see that the blog didn't take much truck with that.

"...Encouraging such extravagant and unnecessary spending in the current economic climate seems wholly irresponsible," they noted and, on the whole, their readers seemed to agree.

Cash back like?

So who's right?

Nationwide claim that the proactive promotion is just like cash back.

But you sign up for a cash back card, it doesn't just land in your lap, and, usually, you don't have to hit a target to earn either.

Nationwide seem to be suggesting that customers just move their usual spending from a debit card to the credit card - which means they'd be able to pay off in full - but do most people really spend £1,000 on purchases a month?

Then there's the problem of automatically crediting a credit card account with £20.

Miss the letter and that's bound to cause some confusion, particularly as four months will elapse from the time it's put in to the time it's taken out.

On the other hand, Nationwide's promotion seems much more benign than some proactive credit card marketing campaigns we've seen in the past.

In May 2008, for example, Barclaycard actively encouraged its customers to use their credit cards to make cash withdrawals.

The following May, in 2009, Lloyds TSB sent out a letter which actively encouraged credit cardholders to spend up to 50% of their cards' credit limits on gambling.

Nevertheless, we've got to go with Bitterwallet on this one - stick with cash back for customers who actually ask for it next time Nationwide.