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Ulster Bank wipes out customers’ credit card bills as it exits Republic

Bank takes a financial hit as it looks to finish shutting down Irish business, with no credit rating damage for co-operating customers

Thousands of Ulster Bank customers with outstanding credit card debt have been told the sums owed have been paid by the bank. Photograph: Brian Lawless/PA
Thousands of Ulster Bank customers with outstanding credit card debt have been told the sums owed have been paid by the bank. Photograph: Brian Lawless/PA
Dominic Coyle
Fri Aug 09 2024 - 17:12

Thousands of Ulster Bank customers will have their outstanding personal credit card balances written off as the bank continues its departure from the Republic’s banking market.

The bank has sent out letters to customers who have yet to close their credit card accounts telling them “the outstanding balance on your credit card account has been refunded”. The bank is also closing the accounts.

“Please do not make any further payments to your Ulster Bank credit card account,” the letter says. “If you have a recurring payment [such as a standing order or direct debit], please ensure you cancel it immediately.” The bank says it will return any payments it receives on the accounts.

A spokesman for Ulster Bank said there was no cap on the amount it was writing off for individual customers. The bank was not prepared to say how many customers would be affected though the figure is understood to be in the thousands. It was unable to say what the average credit card balance was among the customers affected, or how much the total write-off will cost.

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The bank had about 75,000 personal credit card customers in September 2022 when it first notified them of its intent to wind down its Irish business. Customers had six months to organise new facilities with the Ulster Bank cards no longer usable since March of last year.

The vast majority of Ulster Bank customers have already closed their accounts but it is understood that several thousand have been paying down outstanding balances over the past 15 months.

Customers will receive a final statement with a zero balance, the bank said.

Ulster Bank said its decision will not have any credit rating implications for customers who had outstanding card balances as long as they had been working to clear their debt via monthly payments in line with normal credit card practice or through a payment plan if they had been “non-performing customers”.

“We will report to the Central Bank of Ireland consumer credit register that the outstanding debt on your credit card has been repaid in line with the terms and conditions of the account,” the letter from the bank reassures customers.

However, those who have ignored their debt could find themselves with an adverse credit rating report.

“We have also written to credit card customers who have missed payments and not engaged with the bank to date on repaying their outstanding credit card balances. These customers have been given 60 days’ notice to engage with the bank to repay their balance or discuss repayment options,” the bank said in a statement.

“Should the customer not engage following this communication, their balance will be written off and there will be an adverse impact to their credit rating (if the credit limit is €500 or over) which may negatively impact their ability to borrow money or avail of credit facilities in the future.”

Under normal circumstances, banks are required to report borrowings with a €500 credit limit and above to the register – the central database for credit rating in Ireland.

The outstanding credit card debts were among the last issues the bank had to address before its final withdrawal from the market.

It is also currently managing the movement of the second tranche of its tracker mortgages to rival AIB and the migration of a €400 million portfolio of what were formerly offset mortgages to ICS Mortgages parent, Dilosk.

The offset mortgages tracked the ECB rate but allowed the roughly 4,000 customers involved to minimise the mortgage interest they paid by using the funds in their current or savings accounts to reduce the loan balance.

Both transfers are expected to be complete by the end of the year.

Dominic Coyle

Dominic Coyle

Dominic Coyle is Deputy Business Editor of The Irish Times