With many Aussies feeling the financial pinch as a result of the COVID-19 outbreak, Australian credit card holders are turning to banks in an attempt to secure some much needed relief.
In recent weeks, the Big 4 have announced a number of measures to provide support to their customers during this difficult time, offering assistance in the way of payment deferrals and waiving late fees, amongst other measures.
National Australia Bank is the latest lender to announce changes to help Australians impacted by COVID-19, dropping its Low Rate Classic Card by 100 basis points to 12.99%.
It also announced other support measures including waiving late payment fees and reducing the minimum monthly payments on all cards for the next three months.
NAB joins at least six other lenders that have announced support to credit card customers including the Commonwealth Bank. Westpac and ANZ have not announced specific measures for credit card customers.
Despite some lenders announcing credit card support, credit card holders are still the hardest hit as lenders hold onto rate cuts.
Since the GFC in 2008, the cash rate has fallen by 6.5 percentage points to 0.25%, while standard credit cards have increased by 1.37 percentage points on average, and low rate cards have increased by 1.22 percentage points (according to RBA data analysed by Finder).
While the cash rate has been falling since 2011, standard credit cards have increased on average by 0.25 percentage points, and low rate cards fell by just 0.26 percentage points. This is compared to the cash rate falling by 4.50 percentage points since November 2011.
“While it’s great to see more help by our big banks and other lenders, it’s only a short term fix for a major debt issue in Australia.
“We currently have a combined $48.7 billion in credit card debt and this number is expected to rise as millions of Australians are being financially impacted by the coronavirus.
“The Finder app shows that Australians are spending more money using their credit cards while paying less of the balance off. This is a worrying trend. Short term relief is a great start but cardholders need to remember that it’s not free money and they will need to pay it back eventually.
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“With insights from the Finder app also showing Australians have spent an extra $13.5 billion in March alone from panic-buying, now more than ever we need to control our spending.
“If you do have credit card debt that you’re struggling to pay off, interest-free balance transfers could still be a better value option than relying on your lender’s relief package.
|Bank||June 2010||April 2020|
|ANZ Low Rate Card||13.24%||12.49%|
|Commonwealth Bank Low Rate MasterCard||13.24%||13.24%|
|NAB Low Rate Card||13.24%||12.99%*|
|Westpac Low Rate Visa Card||13.24%||13.74%|
*NAB Low Rate Card rate effective April 27 for new cards and opening date of next statement for existing cardholders.
|Bank||June 2010||April 2020|
|ANZ Frequent Flyer Platinum||19.49%||20.24%|
|Commonwealth Bank Platinum Awards||20.49%||20.24%|
|NAB Qantas Reward Premium*||19.99%||19.99%|
|Westpac Altitude Platinum MasterCard||19.64%||20.49%|
*For 2010 NAB Qantas Platinum Visa was used.
What are banks offering to credit card customers?
|Greater Bank||Waiving interest and allowing customers to defer credit card payments for 6 months from April 1, 2020.|
|HSBC||Potential to defer credit card payments by 6 months.Customers can also apply for a temporary credit card limit increase if needed.|
|ING Australia||3-6 month pause on credit card payments.|
|Macquarie Bank||Credit card payments deferred for up to 6 months.|
|Police Bank||Pause or defer payments for up to 6 months on credit cards.|
|Commonwealth Bank||Customers who were unable to make payments for a Credit Card in March will be refunded their late fees and interest charges.|
|NAB||Waive late payment fees and reduce minimum monthly repayment from 2–2.5% to 0.5% or $5 of the closing balance (whichever is higher). NAB Classic Low Rate Card purchase interest rate reduced by 100 basis points to 12.99% p.a. From April 17 for new cards and opening date of next statement for existing cardholders.|
Please note: Other financial institutions may have also announced relief packages for cardholders.
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