Commonwealth Bank to launch new low rate credit card

Sally McMullen 11 October 2017

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The card will have a single-digit interest rate, an instalment plan and real-time alerts.

Commonwealth Bank has announced a new low rate credit card plus two new initiatives to help customers get their credit cards under control.

We don’t know what the credit card will be called yet, but we can confirm it will be available in early 2018 and will have a low purchase rate of 9.90%. This is one of the lowest purchase rates among the Big Four banks, matching the Westpac Lite. Similar to the Lite card, it also doesn’t have an annual fee. Instead, it has an account keeping fee of $5. The card also doesn’t offer cash advances, which will prevent the temptation to withdraw cash and get stung with high cash advance rates.

Real-time alerts

The card will also come with real-time alerts, reminding customers when their payment is due. If you a miss a payment, you’ll receive another alert advising you that if you make your payment by midnight the following day, you will avoid the late payment fee.

Customers whose transaction accounts have been overdrawn due to a scheduled transaction or direct debit will also receive alerts and can also avoid the overdrawn access fee if they settle the payment by midnight.

If you make a high cost purchase or use your card for a transaction that’s considered a cash advance (such as online gambling), you’ll also receive an alert informing you that you’ll incur a cash advance fee and interest.

Instalment plans

CommBank has also announced plans to release a new instalment feature. From mid-2018, customers can choose to pay down large purchases or a portion of their balance via fixed monthly instalments at a discounted rate and over a fixed period. If you have a big purchase that you’ll need more time to repay, this could help give you the breathing room you need to pay it off without incurring high interest rates.

This initiative isn’t the first of its kind, though. We’ve seen other banks such as Citi roll out similar instalment plans to help its credit card customers manage their debt. The introduction of the instalment plan could also be a strategy to challenge the growth of Afterpay and other alternative interest-free finance options.

The low rate trend

Earlier this year, we predicted that some of the bigger banks may start rolling out single digit interest rates after ANZ dropped its interest rates across its platinum and low rate cards. We then saw Westpac launch the Lite credit card with its single-digit interest rate and monthly fees earlier this year. So, it was only a matter of time before CommBank launched its own.

In its half-yearly reports and presentation in February, CommBank also hinted it had plans to invest in new technology and initiatives to encourage more responsible credit management.

Now that ANZ, Westpac and Commonwealth Bank have introduced new low rate credit cards, we just have to play the waiting game until more card issuers jump on the bandwagon. It’s your move, NAB.

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