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 a new introductory offer. We wanted to fill you in and get your thoughts on it.
In December we will be offering a Barclaycard Ring product that will have a 0% intro offer on purchases and balance transfers for 12 months. The variable APR after that time will be 10%. So, while there is a richer incentive to use the card in the short term, the ongoing APR is higher than the 8% variable APR that we currently have. I should also point out that there is a 1% balance transfer fee on this product.
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% 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% variable APR is not sustainable permanently. Therefore we needed to increase the ongoing variable APR to 10%.
There may be a number of thoughts that popped into your head while reading this. The first might be that it’s not fair that some cardmembers will get a 0% introductory offer even if the ongoing variable rate of 10% is higher. I can understand this feeling. Given this is just a test; we have no plans to offer 0% to our existing cardmembers at this time. However, if it turns out that we will be offering more 0% intro offers then we will examine offering 0% intros to existing cardmembers as well.
The second thought might be that this feels like we’re going 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 a 10% variable APR is still a good market rate, 8% is better. This conflict is something we have not 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 a bonus offered to come on board. The 0% intro is an offer used in the industry to incentivize applying for the card, and we want to understand the impact to our applications by offering this particular offer.
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 next.
On December 16, 2015 the Federal Reserve made a decision to increase the current Prime Rate by .25%. These changes will affect the current variable APR for Barclaycard Ring cardmembers and may also impact your minimum payment due. See our Prime Rate FAQs blog for additional information about these changes.