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|