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Westpac launches 0% interest credit card to take on the buy now, pay later sector

Westpac launches 0% interest credit card to take on the buy now, pay later sector

Westpac has announced it’s launching a no interest credit card, similar to those launched by big bank competitors, CBA and NAB last year.

Westpac’s ‘Flex’ credit card, available to customers in the next couple of months, will have a maximum credit limit of $1,000 with no interest charges, no late fees and no currency conversion fees.

The card has a $10 monthly fee, which is waived if you don’t use the card or pay the balance down before the due date each month.

Since launch, CBA and NAB have said their no interest cards have been their most popular new credit cards.

HOW DO THE BIG BANK CARDS COMPARE?

The biggest difference between Westpac Flex and its big bank competitors is the maximum credit limit is just $1,000 compared to $3,000 for the CBA and NAB cards.

Westpac FlexCommBank NeoNAB StraightUp
Interest charges0%0%0%
Late payment fees$0$0$0
Foreign exchange fees0%0%0%
Max credit limits$1,000Between $1,000 - $3,000Between $1,000 - $3,000
Monthly fees$10 / mth

Waived if customers pay the amount owing for the previous month on time.

$1K limit = $12 / mth

$2K limit = $18 / mth

$3K limit = $22 / mth

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

$1K limit = $10 / mth

$2K limit = $15 / mth

$3K limit = $20 / mth

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

Minimum monthly repayments$40 per month2% of balance or $25, whichever is higher.Between $35 and $110, depending on credit limit.
OtherAccess to offers and perks via loyalty programAccess to offers and perks via loyalty programN/A

Source: RateCity.com.au

RateCity.com.au research director, Sally Tindall, said: “Bigger is no longer better when it comes to credit cards, in fact, tiny credit limits and zero interest are new the must haves.”

“Over the last year Westpac has watched NAB and CBA win back Gen Z and millennials with their zero percent cards, and it wants in on the action,” she said.

“Westpac is bending over backwards to serve up what younger Australians say they need and want. The bank already offers 18 to 29-year-olds’ savings rates of up to 2.5 per cent. Now its targeting millennials looking for credit with fewer strings attached.

“The bank was quick to partner up with buy now, pay later market leader Afterpay. Now it’s aiming to expand its own Gen Z and millennial customer base via this new zero percent credit card.

“Like CBA and NAB, Westpac is offering no interest to pay, no currency conversion fees and no late fees. However, Westpac has put more rigorous checks and balances on this new card, with a credit limit of just $1,000 and higher minimum repayments that force customers to clear their debt faster.

"Westpac’s new Flex card might be ‘interest free’, however, customers could end up spending $120 a year in fees if they don’t pay off their debt in full each month.

“For over five years the banks have watched buy now, pay later providers such as Afterpay raid their customer base. The banks tried to beat them, now they’re looking to join them in an effort to win these customers back,” she said.

Westpac Flex vs BNPL

With buy now, pay later providers attracting millions of customers between them, the big banks have been forced to come up with a credit card to compete.

How do the new cards compare to BNPL?

Westpac FlexAfterpayZip Pay
Interest rate0%0%0%
Credit limitUp to $1,000$2,000$1,500
Late fees$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 after 21 days of not paying the minimum.
Ongoing fees$10 per month when in use and debt owing at due date.$0$6/month if you have money owing.
Where can you use it?Anywhere Mastercard is accepted. Not for gambling or cash advancesAffiliated retailers only.Anywhere a credit card is accepted.
Repayment scheduleMin $40 per month4 instalments over 6 – 8 weeksMinimum repayment of $40.

Source: RateCity.com.au

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This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.

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