One of Australia’s big four banks, Westpac, has announced it will support Australians who are doing it tough due to COVID-19 by allowing eligible customers to pause their credit card interest charges and repayments for a three-month support period.
According to Westpac, for three months, eligible customers will not be:
- Charged or accrue any interest on new card purchases or cash advances (note cash advance fees will still apply).
- Charged or accrue any interest on an existing amount owing on the card.
- Required to make any repayments.
However, it’s important to keep in mind that pausing credit card repayments may lead to snowballing debt if you’re not careful.
Summary of major Australia bank credit card options for COVID-19
|Westpac||Pause credit card repayments for 3 months, without charging interest on existing debt or new purchases and cash advances.|
|CBA||Late fee charges waived. Customers can move onto instalment plans (these typically have lower interest rates). Contact the bank to discuss other hardship measures, which could include moving to a low rate card and a repayment pause.|
|NAB||Minimum monthly repayments reduced to 0.05 per cent of closing balance or $5 (whichever is greater) for at least three months. $15 late fees waived. Lowering NAB’s Low Classic card interest rate by 1.00 per cent.|
|ANZ||Customers can move to a lower rate credit card and have the credit limit lowered. Other financial hardship assistance will be offered on a case by case basis.|
|ING||Repayment pause of up to 6 months. Inactive cards will have balance transferred to an instalment plan (interest rate of 9.99 per cent).|
|HSBC||Repayment pause of up to 6 months, can request temporary credit limit increase.|
Time to stay on top of debt
The ability to pause interest repayments is a significant gesture of support from Westpac.
Westpac Chief Executive, David Lindberg, said: “Since announcing our consumer COVID-19 support package last month, we have had more than 40,000 credit card customers come to us seeking additional support with managing their finances.”
“These measures will allow customers experiencing financial stress as a result of COVID-19 to have a temporary reprieve from repayments and interest.
“We are working hard to help all of our customers affected by this crisis and are changing our processes and policies to ensure we can support the individuals and families who need extra assistance,” said Mr Lindberg.
However, if your bank has allowed you to pause your credit card repayments but not your interest charges, you may find yourself with more debt than you started with. Interest will continue to accrue on any outstanding debt, especially if you’re unable to pay any of the balance off in your ‘pause’ period.
Further, it’s important to keep in mind that if, after a pause period, you’re still unable to make repayments, your debt may grow out of control.
You may need more than a temporary fix to get on top of your credit card debt.
Credit card debt tips during COVID-19
- Work on your budget and see if there’s anything you can cut out (weekly takeout meal, Netflix subscription etc.) and put towards your credit card debt.
- Look for things around the house that you may be able to sell on gumtree, eBay or FaceBook Marketplace for some extra cash.
- Consider switching to a lower rate credit card within your bank. This might help to take the pressure off if you have a credit card with a high interest rate. These tend to be no-frills credit cards though, so you may miss out on perks like rewards programs while you pay off your debt.
- Consider taking out a balance transfer so you have more time to work off your debt. Keep in mind balance transfer cards can come with costly interest rates if you make any additional purchases on the card, or if you don’t pay off your debt during the zero per cent balance transfer period.
- Contact your bank. See how your credit card provider may be able to assist you in this time through its hardship support programs.
- If you need additional support, consider reaching out to the National Debt Helpline on 1800 007 007.
Big four banks – lowest rate credit cards
|NAB||Low Rate Card||
*Rate drops from 13.99% to 12.99% from 27 April 2020