CommBank slashes credit card interest by 25 per cent
The Commonwealth Bank of Australia (CommBank) will next year offer a discount credit card, effectively slashing 25 per cent off the interest charged compared with its next cheapest card.
The bank yesterday announced the card would have a “highly competitive” interest rate of 9.9 per cent and a low account-keeping fee of just $5 a month.
The new card will have a low maximum limit and no access to cash advances.
In a bid to help customers avoid paying interest on overdue balances, CommBank is introducing several initiatives for all credit card users, including real-time app alerts for:
- when payments are due
- whenever high-cost transactions have been made
- overdrawn account notifications.
Additionally, from mid next year, customers will be able to use an instalment feature to help pay down balances or large purchases across fixed instalments.
“We know there’s strong demand for a simple credit card option and we also recognise we need to help our customers avoid credit card late payment and overdrawn account fees,” CommBank Executive General Manager Clive van Horen said yesterday.
“The real-time alerts in our CommBank app give customers even more tools to help manage their spending and avoid fees and charges.”
The bank said it wanted to “empower customers to manage their spending”. Whenever a major transaction takes place, for example through an online gambling website or large cash ATM withdrawal, customers would receive an alert.
Other features will include setting a spending cap on transactions and a spend tracker app, which automatically categorises spending and compares the expenditure over several months.
“We’ve heard feedback from customers and consumer groups and understand there’s a need to offer a greater range of affordable and easy to manage products,” said Mr van Horen.
The nation’s biggest bank has finally ‘realised’ that it will do just fine if it charges credit card customers much lower interest rates.
Thanks CommBank, for what may effectively be a belated admission that you have been ripping off credit card customers up until now.
From next year, the bank will offer a credit card with a 9.9 per cent interest rate, undercutting its own previously lowest rate of 13.24 per cent and that of two of its Big Four rivals – ANZ and NAB. But CommBank is not leading. Westpac already has an interest rate of 9.9 per cent on its Lite credit card.
The beleaguered CommBank has many reasons to try and claw back the respect of its customers. The bank’s reputation is certainly on the nose, as a result of being mired in far too many controversies in the past year.
But the way it is going about repairing its brand is not convincing. The bank appears to be following the script of the old nursery rhyme There Was a Little Girl. You know, the lass that “when she was good, she was very, very good. But when she was bad she was horrid”.
Just look at the list of news releases on the bank’s website over the past few weeks. A bad news story is followed by a good news one, followed by another disastrous revelation, followed by a warm and fuzzy one, followed by a reputation-destroying finding, and so on.
The damage control consultants must be laughing all the way to the … um, bank.
On 3 August, CommBank confirmed that the Australian Transactions Reports and Analysis Centre (AUSTRAC) had brought civil proceedings over the bank’s alleged failure to report suspiciously high deposits at certain ‘intelligent’ ATMs. There was speculation that the bank was being used by crime syndicates to launder money.
Following this distasteful revelation, the bank then launched a series of feel-good initiatives aimed at painting itself as a loving and caring corporate citizen. It announced it was backing Australia’s first quantum computing company, detailed its commitment to climate change action and financed two new solar farms.
Three weeks later, CommBank acknowledged it was aware that a class action by shareholders was being considered. (Yesterday, the bank said it would defend itself in the action). After the AUSTRAC debacle, CBA shares were hammered and shareholders are claiming they deserve compensation for substantial losses.
Another flurry of ‘good news’ followed hot on the heels of the class action announcement: “CBA employees help raise $9 million for youth causes”, “CBA partners with Climate Bonds Initiative”, “CBA joins Tour de Tassie”, “CBA announces changes to senior leadership”, “CBA wipes out ATM withdrawal fees”, and the list goes on.
This month, the bank copped flak from consumer advocate CHOICE over revelations it was paying schools to encourage students to sign up for Dollarmite accounts. The same day, CommBank responded with an announcement that it would change the practice.
If this bank thinks it is fooling anyone with proclamations of its social responsibility program, slashing of ATM fees, introduction of ‘inexpensive’ interest rates on credit cards, and so on, then it is mistaken.
Instead of spending millions on PR consultants to write vacuous spin, plus paying heaps to damage-control experts to attempt to repair a tattered reputation, why doesn’t CommBank do something meaningful for its customers?
Like commit to a program to help the needy to pay their soaring energy bills.
CommBank can slash ATM and credit card fees, can commit to supporting youth or climate causes and even quantum computing innovations, but if it really wants to restore its reputation among regular Aussies, it needs to be a genuinely good corporate citizen.
Which bank fails to provide fair service and accountability to Aussies? CommBank does.
Do you pay interest on a credit card? Would you consider switching to another bank?
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