NAB leads credit card reforms
High interest repayments first – high time for others to follow
CHOICE is calling on other banks and financial institutions to follow the lead of the NAB in reforming some of the tricks and traps around credit cards.
NAB today announced positive changes to the way payments and balance transfers are calculated on their cards which will mean consumers pay less interest.
CHOICE says NAB cardholders’ repayments will allow customers to pay off the balances attracting the highest interest rates first as opposed to the lowest, which is how other cards operate.
This includes balance transfers - in most cases, when a consumer makes a repayment, it's usually applied to the portion of the debt that attracts the lowest interest rate (for example, 0% on a balance transfer from another card).
Meanwhile, the cardholder might be accruing interest at 20% on another part of their debt, but that debt isn't reduced.
“NAB should be congratulated for showing leadership in the area of credit card repayments which are beset by complexity and small print which tends to benefit the banks before the customer, “says CHOICE spokesman Christopher Zinn.
“There are plenty of other reforms around cards, such as the many and difficult to compare ways that are used to calculate interest, which other banks may care to get involved in."
The Federal Government has promised several new measures around credit cards including the payment reform the NAB says it will introduce in January.