Monday, 27 September 2010
NAB announced today it would be the first major bank to reform the way both payments and balance transfers were managed on credit card accounts – delivering lower interest payments to bank customers.
The changes are consistent with those called for by consumer advocacy groups and the credit card reforms proposed by the Federal Government during the recent election campaign.
The changes will apply across all NAB consumer and commercial credit cards benefiting more than 1.5 million NAB credit card accounts.
The changes mean NAB credit card transactions attracting the highest interest rate will be paid off before transactions attracting the lower interest rate.
If the rest of the industry followed NAB's lead in all the credit card changes it had made over the last year, it is estimated that Australians would save around $225 million a year in fees and interest.
Last year NAB was the first, and still the only major bank, to have abolished the most unpopular bank fees including the over-limit fee on all NAB credit cards and the overdrawn account fee on all NAB personal transaction and savings accounts.
Announcing the changes, NAB Personal Banking Group Executive, Lisa Gray, said: "Consumers may be unaware that typically across the finance industry their credit card repayments are used to pay off balances attracting the lowest interest rate first, leaving the higher interest balance to attract interest charges.
"This will no longer be the case for NAB customers. Credit card transactions attracting the highest interest rate will be paid off before the lower interest rate – helping to reduce the overall interest cost to our customers," Ms Gray said.
From 14 January 2011, NAB will:
- apply customers' credit card payments against balances in order of the highest to lowest interest rate - helping them minimise the interest they pay on their credit cards (after interest, fees and charges); and
- revert all balance transfers to the lower purchase rate at the end of the period in order to reduce the interest cost to customers.
Ms Gray said these latest changes would particularly benefit those customers who transfered credit card balances to NAB from other credit providers.
"We are making these changes as we are determined to be more competitive. We are also strong advocates for responsible lending and ensuring that we deliver consumers fairer value banking," Ms Gray said.
Over the last year, NAB has saved Australian consumers more than $200 million from the changes it had already made to make banking fairer.
Luisa Ford, NAB Corporate Affairs – M: 0411 024 104
Melissa Clare, NAB Corporate Affairs – M: 0412 866 361
Notes to Editor:
- While credit card providers offer attractive interest rates to encourage customers to switch their balance to them, at the end of the balance transfer period this switches over to another rate, which varies from provider to provider.
- Starting in mid-2009, NAB made a number of industry leading changes to its personal transaction, savings and credit card accounts and ATM network, including:
- joining forces with rediATM to create one of Australia's largest ATM networks so customers can avoid paying additional ATM fees in over 3,100 locations.
- abolishing a $25 over-limit fee on all NAB credit cards;
- cutting a $30 late payment fee on all NAB credit cards to $5;
- abolishing the $4 and $5 monthly account service fees on NAB's popular everyday personal transaction accounts: Classic and e-Banking;
- abolishing a $30 overdrawn account fee on all NAB personal transaction and savings accounts; and
- providing a free payment reminder service for customers who want to know when their credit card bill is due.