Yahoo Finance CBA, NAB unleash new zero-interest cards: How do they compare?
Both NAB and CommBank have taken on buy now, pay later providers by unveiling no-interest credit cards, revealed on Thursday.
Instead of charging interest on your credit card balance, these two cards instead have a monthly fee between $10 and $20 based on your credit limit.
Fee for $1,000 limit | Fee for $2,000 | Fee for $3,000 | |
CommBank Neo | $12 | $18 | $22 |
NAB StraightUp | $10 | $15 | $20 |
But unlike the buy now, pay later options, these cards don’t require users pay off the same amount in each instalment, nor is there a fixed deadline.
And if you don’t make a purchase or carry a balance, the monthly fee is reversed.
“These new cards signal it’s game on between the big banks and buy now, pay later,” said RateCity.com.au research director Sally Tindall.
“Hopefully this competition will bring more low cost, consumer-focused credit options to the table.
How do they stack up compared to credit cards?
While consumer advocates said the NAB StraightUp and CommBank Neo cards were good news for vulnerable Australians, how do they stack up against 0 per cent purchase and no annual fee cards?
“These new offerings are great in certain situations but don’t think they represent better value than traditional credit cards across the board,” Finder insights manager Graham Cook said.
$1,000 purchase paid off over 12 months cost:
Finder compared the two cards to the Reserve Bank of Australia’s average standard rate of 19.94 per cent, and its average low rate of 12.93 per cent, along with the best value low-rate card.
Card | Monthly fee | Purchase rate | Total cost |
Average standard rate (RBA) | $0 | 19.94% | $1,111 |
Average low rate (RBA) | $0 | 12.93% | $1,071 |
Best value low rate card (American Express Low Rate, Finder Awards winner 2020) | $0 | 8.99% | $1,049 |
$10 | 0% | $1,120 | |
$12 | 0% | $1,144 |
However, once the average annual fee is factored in, the competition between those receiving the average standard rate and those using the two new cards gets tighter.
$1,000 purchase paid off over 12 months cost:
Card | Monthly fee | Purchase rate | Total cost |
Average standard rate (RBA) | $153 (avg) | 19.94% | $1,264 |
Average low rate (RBA) | $47 (avg) | 12.93% | $1,118 |
Best value low rate card (American Express Low Rate, Finder Awards winner 2020) | $0 | 8.99% | $1,049 |
$10 | 0% | $1,120 | |
$12 | 0% | $1,144 |
Cooke said that while it’s good to see Australia’s major banks step up, it’s worth considering whether these new cards are the right fit.
“If you plan on carrying a balance, a low rate card with a small annual fee might be a better option,” he said.
On the other hand, the two new cards could be an option for those looking to boost their credit score.
“Overall, Australians – especially younger ones – are dipping into credit cards less and lenders are listening.
“These new cards stand out because they can be used everywhere, won’t accumulate interest and will help build your credit score. Especially for younger Aussies, building, maintaining and checking your credit score is essential to get financing for bigger purchases.”
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