Get your credit card finances in order or we’ll pull the plug on your plastic!

That is the warning to millions of credit card holders from the Royal Bank of Scotland/NatWest group, who are being sent new terms and conditions giving the company the right to “freeze spending” or withdraw it altogether.

It says the changes are designed to help customers avoid long-term credit card debt. But one Guardian Money reader tells us that, in her opinion, the leaflets could “cause massive stress” to some.

So why is the bank clamping down – and is it a good or bad thing?

It says the move is in line with industry-wide new rules introduced by the Financial Conduct Authority (FCA) designed to help people in “persistent debt”.

That means RBS is unlikely to be alone in sending out such warnings.

The new terms and conditions, state that if a customer pays more in interest and charges than other amounts owed (ie, purchases, balance transfers, advances etc) over two 18-month periods in a row, “we may freeze spending on your card account”. It says this will be done “to help you focus on starting to reduce your outstanding debt”.

It adds that a customer will always be alerted before this happens, and an account would only be frozen or withdrawn “if you’re unable or unwilling to reduce the amount you owe”. These changes took effect from 21 May.

RBS/NatWest tells us: “We want to help customers pay off their debts” and the changes “will help us to be able to do that”.

However, the card holder who contacted us says: “The wording on the pamphlet is designed to read as though the bank is helping me, the customer. But it rang serious alarm bells as I considered the implications of what I can only describe as a ‘threat’... RBS appears to be saying that those of us who have used the 0% balance transfers and who are either paying the minimum, or even a higher amount, will now be penalised.”

Meanwhile, one credit card industry expert told Money that the aim of this sort of measure was about “protecting the customer ... so people can’t rack up more debt if they are not managing to pay off the debt they already have”.

Some card holders may take the view that they are managing their finances perfectly well and do not need protecting from themselves, particularly if that protection is going to take the form of the card company threatening to pull the plug on their plastic, potentially leaving them high and dry at the supermarket checkout or on holiday.

RBS says the changes reflect the new FCA rules, introduced on 1 March this year but which do not fully take effect until 1 September. They will force credit card providers to take a series of steps to help customers who have got into a long-term habit of only making the minimum payment each month – something that can often mask underlying financial difficulties.

The regulator says action is needed because more than 3 million UK credit card holders are in persistent debt, typically handing over about £2.50 in interest and charges for every £1 they repay.

Only making the minimum payment can prove hugely costly in the long run. The FCA says someone who borrows £3,000 on a card with an interest rate of 19% APR and only makes the minimum payment – starting at £74 a month and gradually reducing over time – would typically take 27 years and seven months to clear the debt (assuming there was no further spending), and would end up paying £4,192 in interest.

It comes amid this week’s clampdown on high-cost credit by the FCA, following an 18-month review into bank overdrafts, doorstep loans, catalogue credit and rent-to-own borrowing. It proposed a price cap in the rent-to-own sector, but stepped back from ordering price caps on overdrafts.