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NAB launches no-interest credit card

The major bank has introduced Australia’s “first” no-interest credit card in response to competition from burgeoning buy now, pay later services.

NAB has announced the launch of the NAB StraightUp Card, for which it will charge a flat monthly fee.

The major bank said, however, that customers will not pay the monthly fee if the card is not used. It also said there are no other fees and charges, including no interest, annual fees or late payment fees, and no foreign currency fees.

The monthly fee depends on the credit card limit. For example, a credit card with a $1,000 limit would incur a $35 per month fee towards the customer’s balance, with a $10 monthly fee included in the balance, while a $2,000 limit would incur a $75 monthly fee and $15 included in the balance, and a $3,000 limit would incur a $110 fee with a $20 monthly fee included in the balance.

NAB compared the credit card with buy now, pay later services, stating that unlike the latter, its credit card offers a continuing line of credit, can be used anywhere where Visa is accepted, has no late fees and allows customers to repay balances over a longer period of time.

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It can also be used with all contactless options, including Apple Pay, Google Pay, Samsung Pay and NAB Pay.

According to NAB group executive, personal banking, Rachel Slade, the card also has lower credit limits than most credit cards and higher minimum repayments. It does not allow cash advances or gambling transactions.

Ms Slade said the credit card was created in a bid to make it “easy for customers to take control of their finances”.

“Credit cards have not really evolved in recent years. But our customers’ needs and expectations are changing and we want to change with them,” she said.

She cited customer research conducted by Nature Pty Ltd, which showed that 85 per cent of the 2,450 credit card users surveyed aged 18-34 think it is important to feel like they are in control of their credit card usage.

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“Credit cards have not really evolved in recent years. But our customers’ needs and expectations are changing, and we want to change with them,” Ms Slade said.

The new credit card has been launched at the same time as the Reserve Bank of Australia (RBA) released data this week, which indicated a decline in credit card usage and debt among customers.

According to the data, there has been 14.3 per cent drop in the value of credit card retail payments over the 12 months to July 2020, a 10.3 per cent drop in the number of credit cards on issue, and a 5.4 per cent drop in the number of retail payments made using credit cards.

Total balances outstanding on credit cards have dropped by 22.8 per cent over this period, RBA data showed.

However, the value of new payments platform transactions rose by 192.4 per cent over the last 12 months to July, while the number of new payments platform transactions climbed by 119.3 per cent.

Commenting on the RBA figures, RateCity research director Sally Tindall said the decline in credit card usage has been evident since the start of 2018, and this trend is gathering steam, and credit card providers are taking note.

“Australians’ love affair with credit cards is starting to wane and the banks are doing everything they can to reignite the flame,” she said.

She added that credit card companies are also changing their offerings in response to increased customer demand for BPNL services.

“Even the big players in the credit card space, such as CBA and now NAB, have made moves into this arena, knowing that credit cards are no longer kingpin of credit,” she said.

This trend on declining credit card usage reflects those from 2019, when RBA data revealed that debt accruing interest on personal credit cards had decreased by 4.9 per cent year-on-year, while credit card accounts declined by 3.1 per cent year-on-year.

Last year, non-major ME Bank reported impairment losses on its credit card business in its 2019 full-year financial results, with former CEO Jamie McPhee noting that the bank had paused work in bringing more credit cards to market after noticing a “structural” shift away from cards. The bank instead turned its attention to digital wallets.

[Related: Australians wipe $2.45bn off credit card debt]

NAB launches no-interest credit card
NAB launches no-interest credit card
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Malavika Santhebennur

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.

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