BCCM criticises the big banks’ low rate credit card strategies
Big banks are jumping on the low rate trend, but not everyone is happy about it.
2017 has been the year of low credit card interest rates for the Big Banks. In February, we saw ANZ drop purchase interest rates by 2% to 12.49% p.a. across its Low Rate Platinum card and 1% to 11.49% p.a. on its Low Rate Classic card. Shortly after, Westpac announced the launch of its Lite credit card, with a purchase rate of 9.90% p.a. and $9 monthly card fee. This made it the lowest purchase rate among any of the Big Four Banks.
Then this week, Commonwealth Bank announced plans for its own new low rate credit card. It will also offer a 9.90% p.a. purchase rate and a lower monthly fee of $5. The card also comes with an instalment plan and real-time alerts to notify customers of late payments and overspending. Now we can only predict that it’ll just be a matter of time before NAB reveals its own low rate alternative.
While it may seem like the big banks are moving in the right direction, not everyone is ecstatic about the news. CEO of the Business Council of Co-ops and Mutuals (BCCM) Melina Morrison says that these new low rate strategies from the big banks are too little, too late.
“Lower rates are business as usual for the nearly 80 credit unions and mutual banks,” Morrison says. “If this is newsworthy, then we should be asking why it's taken so long to drag the big banks to the table kicking and screaming to do something? It's clearly within their power to do,” she says.
Although single-digit purchase rates may seem groundbreaking among the big banks, a handful of credit unions and community banks offer even lower purchase rates. You can compare some of the cards with more competitive standard purchase rates below:
|Institution||Product||Purchase rate (p.a.)|
|Community First Credit Union||McGrath Pink Visa||8.99%|
|Northern Inland Credit Union||Low Rate Visa credit card||8.99%|
|Bank Australia||Low Rate Visa credit card||9.39%|
|G&C Mutual Bank||Low Rate Visa credit card||9.49%|
Just looking at these examples proves that Morrison has a point. But even if a card has a lower interest rate, that doesn’t mean it’s the right product for you. Instead, you should do your research and, as well as the purchase rate, base your decision on the annual fee, nearby branches or quality of the online banking, interest-free days and extra features (just to name a few). You can also use online comparison sites to compare credit cards side-by-side, making it easier to weigh up your options in one place.
If you’re looking to cut back your interest costs, you can use the low interest comparison on finder to compare some options. If you’re determined to ditch the banks, you can also check out our guide to credit unions for more information.