CBA joins NAB with no interest payment card

CBA joins NAB with no interest payment card to bring in young spenders trying to minimise debt.

CBA is launching its first no interest payment card for customers, CommBank Neo. Picture: CommBank

Commonwealth Bank has launched a new no-interest credit card in a bid to attract younger spenders turning their backs on high debt accruing lending products.

For a monthly fee ranging between $12 and $22, CBA’s new CommBank Neo card provides customers with a credit limit of up to $3000, attracting zero-interest, no annual or late fees and no foreign currency charges.

The new card offered by Australia’s largest retail bank, also gives customers a range of discounts and cash back offers through CBA’s loyalty rewards program.

The move comes on the heels of National Australia Bank launching its first ever no-interest credit card in the Australian personal lending market.

CBA executive of retail banking, Angus Sullivan said the launch of the card was in response to younger consumers having less of an appetite for traditional credit products, which can cause debts to blowout through high interest fees.

Traditional credit cards can attract annual interest rates anywhere between 10 per cent to nearly 25 per cent.

“It is a card to make payments,” Mr Sullivan said. “This is far more expansive than the category label of credit cards.”

The venture into no-interest incurring loans by both banks, coincides with a boom in buy now, pay later lending platforms such as Afterpay and Zip, which are enabling consumers to purchase goods and services through instalment payments that do not incur interest fees.

‘This hybrid space provides much more flexibility to use and pay back over a time which is more convenient for them [consumers],” Mr Sullivan said.

“The buy now, pay later space is very constrained to four payments over a 55 day type of contract.”

NAB group executive for personal banking Rachel Slade has said that credit cards have not evolved with the growing shift towards debit spending.

The NAB StraightUp card gives customers access to up to $3000 in credit, with no interest, no annual fees, no late payment fees and no foreign currency fees.

Both CBA and NAB’s new cards do not charge consumers monthly fees if the card is not in use for a respective month.

CBA’s Mr Sullivan said the bank’s decision to offer cash back rewards for shopping at certain merchants meant consumers would be able to recoup the cost of the monthly fee.

The card’s minimum monthly repayment is $25, or 2 per cent of the closing balance, whichever was greater.

NCA Newswire