Barclays Bank was forced to withdraw advertising yesterday for one of its credit cards after the Office of Fair Trading complained it was "highly misleading."
The climbdown follows an admission by Matt Barrett, the bank's chief executive, to the Treasury Select Committee that he would not borrow on a credit card because it was "too expensive".
Under the "0 per cent for ever" card, balances transferred from other cards do not get charged interest providing other purchases are made at a higher rate. But advertising stated that customers would never pay any interest. John Vickers, OFT chairman, said: "Barclaycard promoted this product as offering the opportunity to borrow at 0 per cent interest for ever.
"It does no such thing. The promotion in these terms has therefore been stopped. Barclaycard owes it to the public to set the record straight."
The OFT's ruling is a further embarrassment for Barclays - Britain's largest provider of credit cards - which was heavily criticised by MPs last month for the high rates it charges customers who use Barclaycards. Mr Barrett, who has been at the helm of Barclays for four years, also came unstuck when questioned by the MPs about exactly how the "0 per cent for ever" card worked.
He insisted the terms and conditions were "clear", but conceded that reading the details of the promotion, which appears in branches and has been sent to hundreds of thousands of customers, was like an "eye test". In the end, Mr Barrett had to get Gary Hoffman, chief executive of the Barclaycard division, to help him explain what a customer would actually have to repay each month if they were to take up the "0 per cent" offer.
The Consumers' Association welcomed the crackdown by the OFT, attacking Barclays' offer as "deeply cynical".
Ashleye Sharpe, of the organisation's magazine Which?, said such offers "target people who are trying to pay off their debts, and yet the conditions of the deal trap them into running up further debt, which is charged at a much higher rate and cannot begin to be cleared until the balance transfer is paid off".
Barclays insisted its customers did understand the terms of its offer and said it did not believe it breached the Consumer Credit Act. Mr Hoffman said Barclays had withdrawn the advertising campaign because the bank took "transparency very seriously and as such, when a body like the OFT raises a complaint about our advertising, we have to listen carefully. We have agreed to change the wording of our advertising and marketing literature to make it more explicit for customers in terms of how the offer works."
The OFT said it was looking at a number of other examples of misleading advertising for credit cards.