12th Oct 2017

CommBank slashes credit card interest by 25 per cent

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Commonwealth Bank slashes credit card interest by 25 per cent
Olga Galacho

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.

 

Opinion: Has CommBank failed to display common sense?

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?

Related articles:
Will scandal break CBA?
Can CBA share slide hurt super?
Are you a CommBank victim?





COMMENTS

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4b2
12th Oct 2017
11:10am
About time the Banks realised they have some responsibility in issuing these cards. Thanks to Elictricity Bill and the Labor party pushing for a Royal Comission the ComBamk is finally taking their responsibilities seriously.

Now for the Petrol inductry and their pricing cycling. What a good way to hide price gouging.
Old Man
12th Oct 2017
11:25am
The banks are only concerned with profits and shareholders who turn up at AGM's. The customer takes a back seat (way back) in their policy deliberations. This latest ploy is just to distract people from the upcoming inquiry.
Joy Anne
12th Oct 2017
11:26am
Still think this is not far enough. All cards should be no higher then 12%, still gouging people and why account keeping fee. Absolutely still not worried about their customers. Been taking from people for years.
Canman
12th Oct 2017
11:43am
Just cut the mongrel credit cards up and get a debit card.
heemskerk99
12th Oct 2017
6:02pm
never was a more true word said, if you are silly enough to go into debt expect to have to pay for being stupid!!!
DrPolymath
12th Oct 2017
12:25pm
All banks are total bastards. None of them can be trusted one iota - except to rip us off as much as they legally can.
heemskerk99
12th Oct 2017
6:18pm
poly or should I say, "poly want's a cracker", those crying loudest and who are too brainless to use the banks to their advantage I say, you use a credit card just don't expect me to feel sorry for you having to pay for that privilege
mike
12th Oct 2017
12:29pm
Now let me understand this, there is a conspiracy theory circulating that our economy was too strong for the Pacific Region and had to be brought down. It was the four banks that weathered the GFC and kept our economy strong so they had to be brought down. Firstly Turnbull forced the banks to greatly increase their cash reserves, allegedly in case of a run on the banks. Seriously, a run on the Australian banks? Cash is expensive, and to have it sitting idly in vaults hit our banks hard. Then Turnbull did the Great Bank $6.9Billion Heist. Stole $6.9 Billion from the banks, saying people wont mind as they are unhappy with the banks. Well we do mind, all the Mum and Dad investors, all our super is in the bank. Turdball. Now he is trying to destroy the Combank. My super is in there. Now tell me this, Turdball can steal $6.9 Billion from the banks, BUT HE CANT FIX THE ENERGY CRISIS. We hold some of the worlds largest gas and oil reserves, but the AGL is mining it and SELLING it overseas and ripping Australia off, and all Turdball can do is say, he is fixing the problem by asking AGL to just explain to customers that are being ripped off what the best plan is for them to be ripped of again. Seriously, if Turdball can rip $6.9 Billion from the banks, but the best he can do is just ask AGL to tell clients what the best plan for them to continue being ripped of. Who is fooling who here. Maybe we should remind our AUSTRALIAN politicions that they are representing AUSTRALIA
4b2
12th Oct 2017
12:59pm
Please dont expect Turnbull to fix the Energy crisis. Remember his NBN solution? His government also gave up all claims on the Timor Straight Gas claim which Howard and subsequent governments insisted were Australian. Maybe the gas reserves wern't significant for Australia's use?

I still cant understand the energy crisis, when they axed the tax energy prices were never lower? Time to bring back the TAX.
Colours
12th Oct 2017
1:07pm
I set myself a recurring task to ensure I pay off the full amount on my credit card every month before it falls due. The interest rates would make a bushranger proud. Of course, the bank hates me for it, but I still manage to sleep at night.
heemskerk99
12th Oct 2017
6:28pm
ain't it great beating the banks at their own game, wish their were more intelligent people like you, you pay on time and nobody can wipe the smile of your face knowing You don't owe the bank f...all!
KSS
12th Oct 2017
1:16pm
So negative Nelly Olga, how about some constructive suggestions instead of simply taking the easy option of criticising CBA for at least moving on a credit card product that may suit some people.

In my opinion if people are in trouble with a credit card they should not have one. If you can't afford to pay it every month you simply can't afford to have it in the first place.
heemskerk99
12th Oct 2017
6:29pm
right on
Sundays
12th Oct 2017
2:02pm
This would be a good product for people who can't pay their credit cards off in full each month. A cut in credit card interest rate is well overdue
heemskerk99
12th Oct 2017
7:06pm
sunday, why, if you can't afford it now can't you just wait until you can, otherwise be prepared to pay extra for using other people's money and taking advantage of their generosity which allow you to reach your target however more then 60% of credit card holders have declared themselves bankrupt and you wonder why the banks charges high interest, I am all for it to scrap every credit card to be replaced by a debit card and look foreward to see the improvement of the interest earned on my accounts.
Sundays
13th Oct 2017
9:19am
Heemskerk9, I always pay my credit card in full. I use it for the frequent flyer points, no cost to me as just purchasing normal items and get 2-3 flights per year. However, I am very conscious that some people are not as well off and need to use their credit cards when unexpected bills arrive. Not talking about irresponsible spenders here. Banks charging 22% interest are just ripping people off
heemskerk99
12th Oct 2017
7:08pm
heemskerk
niemakawa
12th Oct 2017
7:16pm
Sensible people do not use credit cards. Anyone who does , then it is their responsibility alone. People need to take back control of their own lives instead of expecting Governments to bail them out or rescue them from their own deficiencies.
heemskerk99
12th Oct 2017
7:28pm
could anybody put it any better or clearer, best post on this issue
niemakawa
12th Oct 2017
7:17pm
Or if they do then pay the full balance owing every month.
PlanB
13th Oct 2017
6:48am
I use a C/Card but I pay it in FULL every month -- I have NEVER paid a penny interest. si

Since I turned 50 or 60 -- can't remember when --I have not paid ANY account keeping fees either
Tib
13th Oct 2017
10:23am
I never pay interest on my credit card. I always pay it off before interest is due. Gives me a warm feeling not to pay them anything. The bank has enough people it is using like milking cows without me joining in.
heemskerk99
14th Oct 2017
6:46pm
hope the above negative contributors to these columns read tib's comments, more important follow his/her comments!!!!!!


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