CBA cuts 11 interest-free days from its rewards cards

Australia’s biggest bank, CBA, has decreased the number of interest-free days available on its rewards cards in the latest credit card shakeup.

From today, CBA customers with an Ultimate Awards, Smart Awards, Awards, Gold Awards, Platinum Awards or Diamond Awards credit card will see their maximum interest-free days drop from 55 to 44 – a reduction of 11 days.

The bank’s current ‘no frills’ credit cards – the Low Fee and Low Rate cards - will keep their existing interest-free days of ‘up to 55’, while CBA’s Neo card does not charge interest and therefore does not have interest-free days.

Change to interest free days on select CBA credit cards

Source: RateCity.com.au. *No longer offered to new customers.

This change from CBA brings the interest-free days on its rewards cards in line with Westpac and NAB rewards credit cards, leaving ANZ as the only big four bank offering up to 55 days on every one of its credit cards.

Current big four bank rewards cards – purchase rate and interest-free days

Source: RateCity.com.au. *Note: the interest rate on Westpac’s rewards cards are changing to 20.99% on 20 June.

How many interest-free days do lenders typically offer?

The RateCity.com.au database shows:

• 68% of credit cards offer interest-free terms of ‘up to 55 days’.
• 4 cards offer no interest-free days (excluding those cards that do not charge interest).
• The highest number of interest-free days is 110. This is offered by Humm group's 90 Platinum Mastercard, however, after this it charges the second highest interest rate in the RateCity database at 25.80%.

How do interest-free days typically work?

Interest-free days aren’t as straightforward as they might seem.

Banks typically list the maximum amount of interest-free days on their website, but the actual number depends on where you are in your monthly billing cycle when you make the purchase.

For example:

• If your credit card offers ‘up to’ 55 days, then you typically have between 25 and 55 days to pay your purchases off before you get hit with interest (based on a 30-day billing cycle).
• On cards offering up to 44 days, customers have between 14 and 44 days to pay their purchases back, based on a 30-day billing cycle.
• If you have money owing on your card – even if it’s a single dollar – your interest-free days are usually null and void.

RateCity.com.au research director, Sally Tindall, said: “This drop in interest-free days means CBA rewards card customers will have less time to clear their debts in full before they get hit with interest charges.”

“If customers can’t clear their debts in time, or forget to, they’ll be charged interest on everything they owe, including any new purchases, until they wipe the slate clean entirely,” she said.

“While customers who pay their bill in full every month won’t skip a beat, borrowers who maximise their mortgage offset account by keeping their expenses on interest-free terms on their credit card for as long as possible won’t be thrilled about losing 11 interest-free days.

“Those who plan big purchases at the start of their billing cycle to give themselves the maximum amount of time to pay the money back are also likely to be annoyed by this change.

“Impacted CBA credit card customers should double check any automatic payments or reminders will still occur in time to avoid interest charges,” she said.

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