Which banks are offering relief on credit card repayments for COVID-19?

Which banks are offering relief on credit card repayments for COVID-19?

Note: Data updated as of 03/04/2020.

With thousands of Australians losing their jobs due to the catastrophic COVID-19 outbreak, you may be worrying about how you’ll be able to meet your credit card repayments.

Maintaining bills, rent or mortgage repayments is obviously a near impossible task when you’re not earning an income. Luckily, some banks have announced support packages for their customers that include repayment relief and/or freezing credit card repayments.

These relief packages also include the ability to freeze mortgage repayments for up to 6 months, as well as support for small businesses, some fixed rate cuts for home loans and some term deposit rate increases. If you’re a homeowner and want to know if your bank is freezing mortgage repayments, read more here.

The banks offering relief on credit card repayments

The credit card providers offering relief on card repayments amidst COVID-19 are:

  • Australian Unity - repayment relief is available on a case by case basis for up to six months.
  • Bank First - the potential to defer credit card repayments for up to three months. 
  • Bank of Heritage Isle - the potential to defer credit card repayments for up to six months.
  • CUA - repayment relief is available on a case by case basis, with no fees for replacement cards.
  • Greater Bank - the potential to defer credit card repayments for up to six months as of 1 April, as well as the waiving of interest.
  • HSBC - the potential to defer credit card repayments for up to six months.
  • ING – the potential to defer credit card repayments for three to six months.
  • Latitude Financial - the potential to reduce monthly repayments and interest. 
  • Macquarie Bank – the potential to defer credit card repayments for up to six months.
  • Newcastle Permanent – the potential to defer credit card repayments for up to six months.
  • Police Bank - the potential to defer credit card repayments for up to six months.
  • Unity Bank - repayment relief is available on a case by case basis.

Some credit card providers have instead responded by cutting their credit card interest rates. This is typically unheard of following an RBA cash rate cut, but the moves are a sign that lenders of all types are taking the threats of the pandemic seriously.

Credit card providers who announced cuts to their credit card rates:

  • Auswide bank - to reduce its Low Rate Visa credit card to 8.20 per cent.
  • Heritage Bank - to reduce its credit card rates by 25 basis points.
  • NAB - to reduce its NAB Low Rate Classic Card by 100 basis points.
  • Queensland Country Bank – to reduce its credit card rates by 25 basis points.

What if my bank isn’t on that list?

Some lenders haven’t yet outrightly said they’re offering credit card repayment freezes, but many may be able to offer some form of hardship support. 

For example, Coastline Credit Union have stated that its COVID-19 Loan Hardship Relief Package only applies to specific home, investment and business loans. But if you are struggling, you can reach out to its specialists to submit an application for financial hardship.

This may typically be the case for most of the banks who’ve announced some form of a hardship support package but haven’t specified credit cards as being included.

Call up your credit card provider or visit its website to see if you can speak with its customer support team through live chat. Here you can let them know you need help with your repayments, and they can hopefully offer support and take you through the hardship application process.

What other options are there?

If you’re seriously struggling with debt and need a little breathing room, one option to consider is using a balance transfer credit card. They allow you to transfer the balance of your existing credit card debt to a new card with zero per cent interest for a set period of time.

However, this can be a risky option as balance transfer credit cards require a fair bit of discipline. You’ll want to use the zero per cent interest term to actually pay off your balance. If you don’t, you’ll start accruing interest at the end of said term, and these interest rates are generally higher than average. Further, if you use the balance transfer card to make new purchases, you’ll start accruing interest immediately on these purchases. This can cause your existing debt to snowball out of control.

You would also be unlikely to get approval if you had lost your job. You’d need to meet requirements with the balance transfer credit card provider to be approved. These generally include a minimum income, anywhere from $15,000 - $30,000 and more.

If you were to freeze your credit card repayments, and then get another job, you may want to revisit the idea of a balance transfer credit card.

  • Also, don’t be afraid to ask for help outside of your bank. The Australian government has free financial counselling services available, along with their National Debt Helpline – 1800 007 007.

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Learn more about credit cards

What is a balance transfer credit card?

A balance transfer credit card lets you transfer your debt balance from one credit card to another. A balance transfer credit card generally has a 0 per cent interest rate for a set period of time. When you roll your debt balance over to a new credit card, you’ll be able to take advantage of the interest-free period to pay your credit card debt off faster without accruing additional interest charges. If your application is approved, the provider will pay out your old credit card and transfer your debt balance over to the new card. 

Should I get a credit card?

Once you've compared credit card interest rates and deals and found the right card for you, the actual process of getting a credit card is quite straightforward. You can apply for a credit card online, over the phone or in person at a bank branch. 

How to get a credit card for the first time

A credit card can be a useful financial tool, provided you understand the risks and can meet repayment obligations.

If you’re a credit card first-timer, review your options. Think about what kind of credit card would suit your lifestyle, and compare providers by fees, perks and repayments.

Once you’ve selected a card, it’s time to apply. Credit card applications can generally be completed in store, online or over the phone.

When you apply for a credit card for the first time, you must meet age, residency and income requirements. As proof, you must also provide documentation such as bank account statements.

What should you do when you lose your credit card?

Losing your credit card is a serious situation, and could land you in financial trouble. Here is a simple guide detailing what to do when you lose your credit card.

Lock you card – Contact your provider and inform them about your lost credit card. From here lock, block or cancel your card.

Keep track of transactions – Look out for unauthorised credit card transactions. Most banks protect against fraudulent transactions.

Address recurring charges – If your card is linked to recurring charges (gym membership, rent, utilities), contact those businesses.

Check credit rate – To ensure you’re not the victim of identity theft, check your credit rating a month or two after you lose your credit card.

How do you use credit cards?

A credit card can be an easy way to make purchases online, in person or over the phone. When used properly, a credit card can even help you manage your cash flow. But before applying for a credit card, it’s good to know how they work. A credit card is essentially a personal line of credit which lets you buy things and pay for them later. As a card holder, you’ll be given a credit limit and (potentially) charged interest on the money the bank lends you. At the end of each billing period, the bank will send you a statement which shows your outstanding balance and the minimum amount you need to pay back. If you don’t pay back the full balance amount, the bank will begin charging you interest.

How easy is it to get a credit card?

For most Australians, there are no great barriers to applying for and getting approved for a credit card. Here are some points that a lender will consider when assessing your credit card application.

Credit score: A bad credit score is not the be all and end all of your application, but it may stop you being approved for a higher credit limit. If your credit score is less than perfect, apply for the credit limit that you need, rather than the one you want.

Annual income: Most credit cards have minimum annual income requirements. Make sure you’re applying for a card where you meet the minimum.

Age & residency: You need to be at least 18 years old to apply for a credit card in Australia, and most require that you are an Australian citizen or permanent resident. However, there are some credit cards available to temporary residents.

How do you apply for a credit card?

You can apply for a credit card online, over the phone or in person at the bank. Once you’ve compared the current credit card offers, the application process is quick and easy. Before you get your application started, you’ll need to gather your personal information like proof of ID, payslips and bank statements, proof of employment and details of your income, assets and liabilities. To be eligible for a credit card, you’ll need to be an Australian citizen over 18 and earn a minimum of $15,000 each year. Once you’ve applied for a credit card, you should get a response fairly instantly. If your credit card application has been approved, you should receive a welcome pack with your new credit card within 10-15 days.

What should you do if your credit card is compromised?

Credit card fraud is a serious problem. If your credit card is compromised and you’re wondering what to do, here are a few precautionary steps to take.

Contact you credit provider – Get in touch will your credit card provider. If you feel your card has been compromised, you should be able to lock or block it.

Monitor your accounts – Keep an eye on your credit card accounts. Any unauthorised transactions could be a sign your credit card has been compromised.

Check your credit rating – It’s also important to check your credit rating, to ensure you’re not a victim of identity theft or some other financial mischief.

Can a pensioner get a credit card?

It is possible to get a credit card as a pensioner. There are some factors to keep in mind, including:

  • Annual income. Look for credit cards with minimum annual income requirements you can meet. 
  • Annual fees. If high fees are a concern for you, opt for a card with a low or $0 annual fee. 
  • Interest rate. Make sure you won’t have any nasty surprises on your credit card bill. Compare cards with a low interest rates to minimise risk.

How do you use a credit card?

Credit cards are a quick and convenient way to pay for items in store, online or over the phone. You can use a credit card as a cashless way to pay for goods or services, both locally and overseas. You can also use a credit card to make a cash advance, which gives you the flexibility to withdraw cash from your credit card account. Because a credit card uses the bank’s funds instead of your own, you will be charged interest on the money you spend – unless you pay off the entire debt within the interest-free period. If you pay the minimum monthly repayment, you will be charged interest. There are many different credit card options on the market, all offering different interest rates and reward options.

How to pay a credit card

There are a few ways to pay a credit card bill. These include:

  • BPAY - allows you to safely make credit card payments online.
  • Direct debits - set up an automatic payment from your bank account to pay your credit card bill each month. You can choose how much you want to pay of your credit card bill when you set up the auto payments.
  • In a branch.
  • Via your credit card provider's app.

How do you cancel a credit card?

It’s important to cancel your old cards to avoid any additional fees. Unless you’re doing a balance transfer, you’ll need to pay the outstanding balance before you cancel your credit card. If you’ve opted for a card with reward points, make sure you redeem or transfer the points before you close your account. To avoid any bounced payments and save yourself an admin headache, redirect all your direct debits to a new card or account. Once you’ve done all the preparation, call your bank or credit card provider to get the cancellation underway. Once you receive a confirmation letter, destroy your card and make sure the numbers aren’t legible.

How to pay a credit card from another bank

Paying or transferring debt from one lender to the other is called a balance transfer. This involves transferring part or all of the debt from a credit card with one lender to a credit card with another. As part of the process, your new lender will pay out the old lender, so that you now owe the same amount of money but to a new institution.

Many credit card providers offer an interest-free period on balance transfers to help new applicants better handle their debt. During this period, cardholders are not required to pay interest on the debt they brought over from the other card. This can be a great opportunity for consumers to pay off credit card debt with no interest. There are often fees associated with balance transfers; normally, these are a percentage of the amount transferred.

So make sure you read the terms and conditions of the card before transferring any debt across.

How is credit card interest charged?

Your credit card will be charged interest when you don’t pay off the balance on your credit card. Your card provider or bank charges you the individual interest rate that is associated with your card, which is usually between 10 and 20 per cent. 

The interest will be added onto your bill each month or billing period if you don’t pay off the balance, unless you are in an interest-free period.

You will be charged interest on anything that hasn’t been paid for inside the interest-free period. Usually you will receive a notice on your bill or statement saying you will be charged interest so you have some form of notice before you’re charged.