It was recently announced that the Barclays Ring card is going to experiment with a 0% interest introductory offer version of the card, which will have the typical 0% introductory interest period like so many other banks, and will have a higher rate once the promotional period ends. It saddens me to see them running with the crowd instead of sticking to their wonderful idea of a no-frills high-value card without bells & whistles. Here’s the announcement which appeared 2 weeks ago:
As you know we like to keep our Barclaycard Ring community informed of our activities. Your feedback is very valuable to us and we take it into consideration when making strategic decisions about Barclaycard Ring. With that said, we are planning a direct mail test with new introductory offers. We wanted to fill you in and get your thoughts.
In October we will be sending a direct mail campaign that will offer Barclaycard Ring products with 0% Introductory APR offers. The three offers that will be tested through direct mail (these offers will not be available online):
- A 0% intro offer on purchases for 12 months AND a 0% intro APR for 12 months on balance transfers made within 45 days of account opening. The variable APR that will apply after the introductory periods expire will be 12.25%.
- A 0% intro offer on purchases for 15 months. The variable APR that will apply after the introductory period expires will be with a contract rate of 12.25%.
- A 0% intro offer on purchases for 15 months. The variable APR that will apply after the introductory period expires will be with a contract rate of 14.25%.
So, while there is a richer incentive to use the card in the short term, the ongoing APR is higher than the 8.25% variable APR product currently offered with no intro rates.
The purpose of the test is to understand how many more (or less) people respond to the offer with an introductory rate versus the 8.25% variable APR offer in the market today. Adding an introductory rate on purchases and balance transfers alters the financials of the product such that an 8.25% variable APR is not sustainable as the standard contract rate. Therefore the standard contract rates needed to be 12.25% and 14.25% in order to test this introductory 0% APR offer.
As with previous tests, there may be a number of questions you have while reading this. The first question you might have is, “Can you give existing cardmembers a 0% intro offer? It’s not fair that new cardmembers will get a 0% introductory offer even if the ongoing variable rate of 12.25 or 14.25% is higher.” It’s a good question. Given this is just a test; we currently do not have plans to offer 0% to our existing cardmembers at this time.
The second question you might have is, “Don’t these multiple APRs go against the grain of what sets Barclaycard Ring apart?” It’s true. We established Barclaycard Ring to offer great long term value to our cardmembers, and while 12.25% and 14.25% variable APRs are still a good market rate, 8.25% is better. This is not something we have taken lightly and we’ve thought about it a great deal.
We know there are cardmembers who enjoy how the product works today, but we also know that many people don’t pay attention to the product because there isn’t an introductory offer to come on board. These 0% intro offers are commonly used in the industry to encourage application, and we want to understand the impact these offers have on the Barclaycard Ring MasterCard. By getting a better understanding of their impact, we will be able to make additional product decisions in 2017.
Please let us know your thoughts on this test and we’ll keep you posted on the results and what we’ll be up to in 2017.