CommBank AdvancePay: Borrow hundreds of dollars for a $5 to $10 fee

CommBank AdvancePay: Borrow hundreds of dollars for a $5 to $10 fee

The Commonwealth Bank is piloting a new program that’ll see participants tap into hundreds of dollars for a flat fee -- provided they make their repayments on time.

Existing NetBank customers can apply to be part of CommBank AdvancePay, a trial offering customers as much as $750 without interest charges provided they don’t fall behind on repayments.

“CommBank AdvancePay allows customers to access money they expect to be paid, before their next pay day,” a company spokeswoman said.

“This will help customers manage unexpected expenses without having to resort to more expensive types of short term lending.”

Eligible customers could have access to $300 to $500 for an upfront fee of $5, or $501 to $750 for an upfront fee of $10.

And if they repay the amount by the due date, no interest is charged.

But if they fall behind on repayments, their account will be considered overdrawn and they will face a debit excess interest charge. Currently, the interest rate is 14.9 per cent per annum.

What are the details?

CBA customers interested in joining the trial can apply via NetBank. A credit check will be performed and a response will be provided after one business day.

There are some eligibility requirements. People interested will need to be receiving a regular income into a CBA transaction account and it’d have to be an individual account only.

Limits will be placed on the number of times AdvancePay can be accessed, CBA said. It also won’t be made available to customers experiencing hardship or are in arrears.

“Access to CommBank AdvancePay is for eligible customers and available on a limited basis (not every pay cycle),” the spokeswoman said.

“This offers consumers protection that they are not overextending themselves with additional short term debt and avoiding dependency.”

The bank expects to roll out AdvancePay to more eligible customers in the coming months -- and they said more features could be added too.

How does it stack up?

AdvancePay does offer some advantages when compared to CBA’s own redraws. The bank’s overdraft facility charges $10 a month and calculates interest at 14.9 per cent. In comparison, AdvancePay has $5 or $10 fees, and there is an interest free period -- make the repayments on time, you won’t face additional charges.

Buy Now Pay Later (BNPL) services like AfterPay and ZipPay don’t typically charge interest on purchases, instead generating revenue by charging late fees and their merchant partners. But AdvancePay customers can use the money anywhere they like, including to pay off bills and other essential items.

People’s finances aren’t one size fits all. Whether AdvancePay is a good option will depend on people’s personal financial circumstances, Sally Tindall said, research director at RateCity.

“At the end of the day there are pros and cons to most of these,” she said.

“Whichever platform they choose, they should read the terms and conditions very carefully and make sure they pay the money back within the allocated time. Every single payment option can trip you up in some form or another.”

Check out the detailed comparison below to see how AdvancePay differs from other credit services.

Provider Where can you use it? Repayment schedule Max credit Charges

(fees & interest)

Late payment fees Perform credit checks?
CBA Advance Pay Anywhere – it’s like an overdraft on your bank account Repay by your nominated pay date Up to $750 Between $5 and $10 per mth. Overdrawn fee ($15/day) and interest rate of 14.9% will apply Yes
mypaynow.com.au Anywhere, it’s similar to an ATM (offers $50 or $100 amounts) Repay by day of next wage Up to 25% of your next pay (up to $750) Flat 5% fee or $5 per $100 None? Can’t access any further funds if payment is missed No
BeforePay Anywhere Flexible payments up to 4 weeks Up to $200 cash out. 5% transaction fee. No late fees.  
Zip Pay Anywhere Flexible repayment schedule provided you pay a min $40 / mth Up to $1000 $6/mth if you have money owing. Late payment fee of $5 after 21 days of not paying the minimum. YES
Bundll Anywhere Mastercard is accepted. 2 weeks. Extend to up to 12 wks for a fee. $1,000 for basic bundll No fees for basic bundle. A 12 wk plan costs 5% of amount. $10 late payment fee then account is suspended No credit check for standard bundll.
Humm (little things) Affiliated retailers + majority of BPay billers. 5 or 10 fortnightly instalments $2,000 No fees if making 5 fortnightly instalments.

$8 mthly fee if making 10 fortnightly repayments.

$6 for each late payment May check credit rating, but won't affect score
Afterpay Affiliated retailers only 4 instalments over 6-8 wks Up to $2,000 See late payment fees. No sign up fees or interest charged. Max fee 25% or $68 whichever is lower. No

 

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Learn more about savings accounts

How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

How to make money with a savings account?

Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

To make sure your savings account makes money and doesn’t lose money, it’s important to maintain a large enough minimum balance that the annual interest earned exceeds any annual fees charged on the account.

Can you have a joint savings account?

Yes. Joint savings accounts can be useful for two or more people wanting to combine their savings to meet shared financial goals, including spouses, flatmates and business partners.

Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly. 

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While personal loans and medium amount loans don’t offer guaranteed approval, there are steps you can take to help increase the likelihood of your application being approved, including:

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Who has the highest interest rates for savings accounts?

As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

How to open a savings account for my child?

Some banks and financial institutions allow parents to open a bank account for their child as soon as it is born, and start depositing funds to go towards the child’s future.

Children’s savings accounts generally don’t have fees, and are structured to help develop positive financial habits by limiting withdrawals, encouraging regular deposits, and earning interest on the savings, similarly to standard savings accounts.

What is a savings account?

A savings account is a type of bank account in which you earn interest on the money you deposit. This makes it one of the easiest and safest investment tools.

Should I open a Commonwealth locked savings account?

If you have trouble saving money, a Commbank locked savings account could be a potential solution. A locked savings account won’t let you make withdrawals and as such, it can help you grow your savings balance if you keep topping it up. 

The Commonwealth locked savings account advertises high-interest rates and minimal maintenance fees, along with a host of other incentives that will encourage you not to touch the money. 

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What is a good interest rate for a savings account?

A good rule of thumb to keep in mind with savings accounts is to look for a rate that is higher than the CPI inflation rate. This number is constantly changing, so check the Reserve Bank of Australia’s page. If you aren’t earning interest above this then the value of your money will go backwards over time.

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It’s not usually possible to set up a direct debit from your savings account to cover ongoing expenses or bills, as savings accounts are structured around growing your wealth by earning interest on regular deposits, and discouraging withdrawals.

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