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CBA launches Australia’s second no interest credit card in as many days

CBA launches Australia’s second no interest credit card in as many days

Australia’s biggest bank, CBA, has announced a no interest credit card – the second of its kind in as many days.

The CommBank Neo card won’t be available for customers until late 2020. It will have credit limits of $1,000, $2,000 and $3,000 with no interest and no late fees or currency conversion fees.

The card includes a monthly fee based on the credit limit. However, there’s no fee if you don’t use the card and have a $0 balance throughout any given month.

This week, big four bank, NAB, launched the StraightUp no interest credit card with near identical terms and conditions.

With buy now, pay later services like Afterpay and Zip Pay attracting more than 5 million customers between them, the big banks have been forced to come up with a credit card to compete.

HOW DO THE BIG BANK CARDS COMPARE?

CommBank Neo NAB StraightUp
Interest charges0%0%
Late payment fees$0$0
Foreign exchange fees0%0%
Credit limitsOpt for a $1K, $2K or $3K credit limitOpt for a $1K, $2K or $3K credit limit
Monthly fees$1K credit limit = $12 / mth

$2K credit limit = $18 / mth

$3K credit limit = $22 / mth

Waived if you don’t use the card and have a $0 balance.

$1K credit limit = $10 / mth

$2K credit limit = $15 / mth

$3K credit limit = $20 / mth

Waived if you don’t use the card and have a $0 balance.

Minimum monthly repayments2% of balance or $25, whichever is higher.Between $35 and $110, depending on credit limit.
Where it can be usedAnywhere Mastercard is accepted. Not for gambling or cash advances.Anywhere Visa is accepted. Not for gambling or cash advances.
OtherAccess to CBA’s Mastercard rewards program available to debt and credit customersN/A

Source: RateCity.com.au

RateCity research director, Sally Tindall, said: “These new cards signal it’s game on between the big banks and buy now, pay later."

“Hopefully this competition will bring more low cost, consumer-focused credit options to the table,” she said.

While CBA’s card is eerily similar to NAB’s, aside from the small variation in monthly fees, there are two key differences.

“The main difference between the two cards is NAB is asking customers to pay back more of their debt each month, which will see them clear it faster,” she said.

“The second difference is CBA offers shopping perks, but only if customers spend at certain stores.

“Customers should be wary: if they start buying things in a bid to claw back their monthly fee, then they’ve probably been had.

“Bank minds clearly think alike when it comes to tackling buy now, pay later.

“At this rate, Westpac and ANZ will have interest free cards on offer before the weekend’s out,” she said.

How do the new cards compare to buy now, pay later services?

CommBank Neo card NAB StraightUp cardAfterpayZip Pay
Interest rate0%0%0%0%
Credit limitUp to $3KUp to $3K$2K$1.5K
Late fees$0$0$10 per late repayment. An extra $7 if you don’t pay in 7 days. Max fee 25% or $68 whichever is lower.A late fee of $5 applies after 21 days of not paying the minimum
Ongoing feesUp to $22 per month when in use or debt owingUp to $20 per month when in use or debt owing$0$6/mth if you have money owing.
Where can you use it?Anywhere Mastercard is accepted except gambling and cash advancesAnywhere Visa is accepted except gambling and cash advancesAffiliated retailers only.Anywhere a credit card is accepted.
Repayment schedule2% of balance or $25, whichever is higher.Minimum repayment of $35 - $110 depending on credit limit4 instalments over 6 weeksMinimum repayment of $40.

Source: RateCity.com.au

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This article was reviewed by Senior Finance Writer Liz Seatter before it was published as part of RateCity's Fact Check process.

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