NAB increases rates on select credit cards

Australia’s second largest credit card provider, NAB, has today increased interest rates across select cards.

The interest rate for the NAB Low Rate, Rewards and Qantas cards have all increased by one percentage point, effective today.

NAB credit cards: today’s interest rate changes

Source: RateCity.com.au.

CBA increases credit card fees on its Neo card

NAB is not the only big four bank to increase its credit card pricing this year. Last Wednesday (7 February), Australia’s largest bank, CBA, hiked the monthly account fees on its ‘no interest’ credit card, Neo.

As a result, Neo credit card users are now paying a monthly fee of up to $5 more, depending on their credit card limit, if they use the card that month or have a debt owing.

CBA Neo credit card: change to monthly account fees - effective 7 February 2024

Source: RateCity.com.au. Note: monthly fees on the Neo card are only if you have a debt owing or you use the card within that month.

RateCity.com.au database shows for credit card interest rates:

• 6 lenders have increased the rates on 25 cards in the last six months. This includes CBA, NAB and ANZ.
• 18.14% is the average credit card purchase rate, of those accounts paying interest.
• 7.49% is the lowest credit card purchase rate from G&C Mutual, and 27.49% is the highest credit card purchase rate from Latitude Finance.
• 12 lenders offer credit card options under 10% (excludes 0% interest cards which are fee-based instead).

RateCity.com.au database shows for credit card annual fees:

• 5 lenders have increased the annual fees on at least one card in the last six months. This includes CBA, Westpac (existing customers) and ANZ.
• $163 is the average credit card annual fee, of those that charge a fee.
• $1,200 is the highest credit card annual fee, however, 26 providers have credit cards with no annual fee.

RateCity.com.au research director, Sally Tindall, said: “These rate rises from NAB and CBA are minor in the scheme of things, however, they serve as a good reminder to check whether you’ve got the right credit card in your wallet.”

“While credit card interest rates do not move in line with RBA decisions, banks can hike the rates on these cards at any time they choose,” she said.

“In the past six months, three of the big four big banks have increased rates on select cards. As a result, the highest purchase rate from a big four bank is now 20.99 per cent.

“Even within a bank, rates and fees can vary wildly. All four big banks have low rate, low fee options, but anyone on the hunt for rewards points has to be prepared to pay some pretty hefty fees, and if they can’t clear their debt each month, eye watering interest rates.

“If you are determined to keep a credit card in your wallet, take the time to find the right card for your circumstances. As exciting as a swag of points may seem, if you’re paying through the nose in fees and interest, you could be the one that’s being had,” she said.

Take the 2-minute credit card test: what card is likely to suit your finances and your personality?

Are you:

• A big spender looking for kickbacks: you put most purchases on your credit card but clear the balance owing in full, every single month. A rewards card could potentially work in your favour but ONLY if you aren’t paying more in fees and credit card surcharges than you’re getting back in rewards.

• A planner: someone who wants a credit card in case of emergencies. A low fee card is likely to work in your favour. The RateCity.com.au database shows there are 26 credit card providers that charge no annual fees. Alternatively, you can explore interest free card options which charge fees, but only when you use the card and / or have a debt owing.

• Shrewd but not infallible: you clear your credit card debt most months but have been known to slip up. A low-rate credit card might be the sensible option for you. The lowest rate card on the RateCity.com.au is 7.49 per cent from G&C Mutual, however, there are 12 different lenders offering purchase rates under 10 per cent to choose from.

• Just starting out in the world of credit cards: with over 150 cards in the market, picking out your first credit card can be confronting. Having access to a low credit limit is imperative when you are just starting out. It’s also wise to aim for a card with low fees and a low interest rate in case you slip up. The ‘interest-free’ cards from CBA, Westpac and NAB have good bumper rails in place to stop you from getting into excessive trouble, however, they can end up being a more expensive option if you use the card regularly. Alternatively, stick to debit and live without the headaches credit cards can bring.

• Falling down a rabbit hole: using your credit card to plug a gap in your budget. Filling gaps in your budget by putting it on your credit card can make a bad situation worse. Take a breath, put the card out of sight, and get to work on repairing your budget for good.

• On the debt treadmill: You jump from balance transfer deal to balance transfer deal, hoping the merry-go-round never stops. Life is too short to be living in fear of whether you’ll be able to get your next balance transfer. It’s time to cut the umbilical cord and live debt free. A personal loan can sometimes be a cleaner way to clear your debt because it forces you to pay your balance off in full within a set timeframe, without the temptation to add to it.

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