New Auswide credit card provides interest rate certainty

Auswide Bank has launched a Visa credit card whose interest rate is tied to the official cash rate, two years after unveiling a similar home loan product.

The Low Rate Credit Card adds a margin of 7.95 percentage points to the Reserve Bank cash rate.

So with the cash rate currently at 1.50 per cent, Auswide’s new Visa card is currently priced at 9.45 per cent. This interest rate applies to both purchases and cash advances.

If the Reserve Bank raised the cash rate to 1.75 per cent, Auswide would increase the Low Rate Credit Card’s interest rate to 9.70 per cent.

If the cash rate fell to 1.25 per cent, the Low Rate Credit Card would fall to 9.20 per cent.

The one exception to this rule would be if the cash rate fell below 0 per cent; in that case, the Low Rate Credit Card would remain at 7.95 per cent.

Auswide’s new credit card has an annual fee of $50, although this is waived for those aged under 25.

Chief customer officer Damian Hearne said Auswide introduced the Low Rate Credit Card in response to feedback from customers and staff.

“We think our low-rate Visa credit card is superior in rate and also offers certainty to customers across Australia who are looking to manage their finances more affordably,” he said.

“Auswide Bank launched its RBA Rate Tracker home loan in [2016] and we think that with a similar feature for credit cards that this will prove highly popular.”

The RBA Rate Tracker home loan has a margin of 2.49 percentage points, so it’s currently priced at 3.99 per cent.

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