Lenders are starting to wind back their credit card offers during the COVID-19 pandemic
Many lenders are putting a stop to credit card deals due to the financial uncertainty during COVID-19. Jetstar, Myer and Woolworths are among those stopping new customer applications.
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Cash-strapped Australians hunting for a new credit card have less choice, with many lenders putting an immediate stop to plastic deals.
Supermarket giant Woolworths, department store Myer, Macquarie Bank and airline Jetstar are among those to have stopped taking new card customer applications – a direct result of the financial fallout from the COVID-19 pandemic.
National Australia Bank has removed three cards from the market in recent weeks including the Qantas Rewards card, Low Rate Premium card and Rewards Card Classic, an analysis from financial comparison website Mozo found.
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ANZ has also removed a rewards card offer of 75,000 bonus Velocity points.
Mozo spokesman Tom Godfrey said the suspension and removal of credit cards by major players in the market was “a blow for Australians”.
“With people turning to credit in a time of crisis to get through to payday a lot of us will lose access to a short term financial lifeline,” he said.
“Worryingly, as unemployment continues to rise we’re likely to see more providers tapping out of the market and shutting the door to new customers.”
A Woolworths spokesman confirmed the company had stopped offering cards via its card partner Macquarie Bank due to the “financial uncertainty facing many borrowers”.
“We hope to re-open applications as soon as possible and ask interested customers to register their interest on our website in the meantime,” he said.
Credit cards continue to attract hefty interest rates – Mozo found the average credit card interest rate is 19 per cent with the highest rate at 24.99 per cent.
Some banks have relaxed card rules during the pandemic including NAB which revealed it would waive late payment fees – these can be up to $30 from some providers – and reduce minimum monthly repayments on all credit cards.
And an NAB cards the minimum monthly repayments required each month have been reduced from at least two per cent to just 0.5 per cent of the closing balance of $5, whichever is greater from April 27 for the next three months.
But customers should ensure they still meet as much of their monthly repayments as they will still be charged interest on the balance owing.
Queensland Consumers’ Association spokesman Ian Jarratt urged consumers to be very careful before signing up to credit card deals.
“Now, more than ever, consumers should be signing up for new credit cards only after seeking advice and shopping around,” he said.
“They also need to fully understand the features, costs, etc of a new card and be sure that it will meet their needs otherwise, they could end up worse off.”
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