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CBA cuts credit card interest-free days as bank warned to ‘tread carefully’

Commonwealth Bank credit card customers will have 11 less days to repay their balance, before they are charged interest.

Commonwealth Bank (CBA) has slashed the number of interest-free days offered on its rewards credit cards, giving customers less time to pay off their debts before they are hit with interest charges.

The major bank will reduce the interest-free period on its award credit cards from up to 55 days to up to 44 days from May 1. Its low fee and low rate credit cards will continue to offer up to 55 interest-free days.

The move brings CBA in line with competitors Westpac and NAB’s rewards cards, with ANZ the only major bank to offer up to 55 days interest free on all of its credit cards.

CBA
CBA is reducing the number of interest-free days given to these credit card customers.

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RateCity research director Sally Tindall said the change was small in the scheme of things but could catch some customers “off guard” and be enough to push them to switch providers.

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“The bank’s decision to reduce the number of interest-free days on its rewards cards comes on the back of both rate and fee rises on a range of CBA credit cards over the last eight months,” Tindall told Yahoo Finance.

The major bank previously increased the interest rate on select cards to 20.99 per cent, including on its low fee, awards, smart awards and ultimate awards cards. It also increased the fees on its no-interest credit card Neo.

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“While these tweaks, all of which have been relatively minor, are designed to bring in more revenue, with over 150 different cards on the market, the bank will have to tread carefully if it wants to retain its existing customers and keep attracting new ones in the door,” Tindall said.

The changes mean customers will now have 11 less days to pay off their debts in full before they are charged interest.

“If customers can’t clear their debts in time, or forget to, they’ll be charged interest on everything they owe, including any new purchases, until they clear the slate entirely,” Tindall said.

“CBA credit card customers affected by this change should double check that any automatic payments or reminders will still occur in time to avoid interest charges.”

Australia’s total credit card debt attracting interest rose by $36.1 million in February, the latest RBA data found, to a total bill of $17.61 billion.

Who offers the longest interest-free periods?

The highest number of interest-free days available is 110 from Humm group’s 90 Platinum Mastercard, according to RateCity’s database. The catch is the card comes with one of the highest interest rates at 25.80 per cent.

The lowest number of interest free days is 0 and is offered by four providers - Heritage Bank, Qudos Bank, Bank Australia and Suncorp. This is in addition to bank’s interest-free credit card options, such as CBA’s Neo, which work more similarly to buy now, pay later schemes.

The most popular interest-free period is up to 55 days and is offered on select cards by all the Big Four banks, Citi, AMEX and others. This is followed by up to 44 days, according to RateCity’s database, then 45 days which is offered by select Westpac and ING cards.

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