Compare “Interest Free” Credit Cards | Savings.com.au

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There seems to be a lot of interest in zero interest as there are now four zero interest credit cards available to Australians. But are they as good as they look?

With Community First and Westpac launching “interest-free” cards days apart, there are now four interest-free credit cards on offer in Australia. Typically, these types of credit cards aim to compete with the popular Buy It Now, Pay Later (BNPL) industry by offering zero interest rates, no late payment fees, as well as general flexibility and convenience. offered by services like Afterpay and Zip.

As zero interest credit cards gain in popularity, it’s important to understand what you’re actually getting with these cards. Is there one credit card that stands out from the crowd? Or should you stick with your regular credit card?

Comparison of zero interest credit cards

There are four “zero interest” credit cards: NAB StraightUp, CommBank Neo, Westpac Flex and Community First n0w. See how they stack up below.

Mark Basic Overview – Credit Limits and Monthly Fees
NAB StraightUp
  • $ 1,000 – $ 10
  • $ 2,000 – $ 15
  • $ 3,000 – $ 20
CommBank Neo
  • $ 1,000 – $ 12
  • $ 2,000 – $ 18
  • $ 3,000 – $ 22
Westpac Flex
Community first now
  • $ 1,000 – $ 9
  • $ 2,000 – $ 14
  • $ 3,000 – $ 19

NAB StightUp

NAB launched Australia’s first zero interest credit card in September 2020, giving consumers access to a credit limit of up to $ 3,000 with no interest or other fees charged. Instead, the card charges a fixed monthly fee based on the user’s credit limit.

The monthly fees are broken down as follows:

  • $ 1,000 credit limit: monthly fee of $ 10

  • $ 2,000 credit limit: monthly fee of $ 15

  • $ 3,000 credit limit: monthly fee of $ 20

In addition to the standard monthly fees, the minimum payment required for each card is broken down by credit card limit. For the limit of $ 1,000, a minimum payment of $ 35 each month must be made; for the $ 2,000 limit, it’s $ 75 per month; and for the $ 3,000 credit limit, the minimum payment is $ 110 per month.

Additionally, if the card is not used and / or has a balance of $ 0 throughout the statement period, the monthly fee is waived. The card has no international transaction fees, no interest (obviously) and no late fees.

The card also does not have free insurance included; you will not earn any reward points for using it; no balance transfer; there are restrictions on cash advances and gambling; and you cannot have additional card holders.


CommBank Neo

Launched just a day after NAB’s StraightUp credit card, the Commonwealth Bank “CommBank Neo” zero interest credit card works quite similarly to NAB’s product. With no interest or late payment fees, the card works with a single monthly subscription. Again, consumers can access a credit card limit of $ 3,000 with monthly fees based on said limit:

  • $ 1,000 credit card limit: $ 12 monthly fee

  • $ 2,000 credit card limit: $ 18 monthly fee

  • $ 3,000 credit card limit: $ 22 monthly fee

The monthly card fee is slightly more expensive than NAB’s, but overall it’s pretty similar. If you do not use the card / the balance is fully refunded, monthly fees do not apply. There are no interest, no fees and no international transaction fees. In addition, users could get cash benefits through “CommBank Rewards”.

Again, you will not earn any reward points with this card; international travel insurance is not included; there is no balance transfer; and cash advances are usually blocked.


Westpac Flex

Westpac recently announced that it will be joining its major banks, NAB and CommBank, with its own interest-free credit card. However, it is somewhat different from the other three credit cards mentioned here. Unlike NAB, CommBank, and Community First, Westpac’s Interest Free Card is fully digital.

Plus, it comes with a much lower credit limit than other cards. While every other card has a credit limit of up to $ 3,000, Westpac Flex only offers its users up to $ 1,000. This comes with a simple monthly fee of $ 10, which does not apply if there is no outstanding balance, making it comparable to NAB StraightUp.

The card does not charge any interest, late fees or foreign transaction fees; it offers insurance against fraud; and you can access Westpac extras and rewards. You can also set up automatic refunds for the minimum refund ($ 40) or the full amount – whichever suits you.


Community first: n0w credit card

It’s “now” with a zero – smart, eh? The most recent zero-rate credit card to join three of the Big Four is Community First – a credit union – making it the first credit union to launch an interest-free credit card product.

It works quite similar to the first two cards mentioned. No interest, no late fees – just a monthly subscription. Slightly cheaper than the others, the n0w credit card offers consumers a credit limit of up to $ 3,000 and the monthly charge is broken down according to that credit limit.

  • $ 1,000 credit limit: $ 9 per month

  • $ 2,000 credit limit: $ 14 per month

  • $ 3,000 credit limit: $ 19 per month

The minimum repayment is 2.5% per month, or $ 20. Unlike other banking offers, the card has a cash advance feature with a $ 3 fee for use in Australia and a $ 5 cash advance fee overseas. It also has an international conversion fee of 3%. However, there is no question of erasing the monthly fee if the balance is paid off.


A four-way comparison: which credit card is right for you?

Well, which one is the best of the bunch? In order to clearly compare the four options you have for zero rate credit cards, let’s outline the pros and cons of each product. This way, if you are considering replacing your regular credit card with an interest-free card, you understand your options.

NAB StraightUp

  • No additional insurance

  • No reward points

  • No balance transfer

  • Restrictions on cash advances and gambling (could be a pro)

  • No additional card holders

CommBank Neo

  • Most expensive monthly fees

  • No additional insurance

  • No reward points

  • No balance transfer

  • No cash advances

  • No additional card holders

Westpac Flex

  • Digital card

  • Of no interest

  • No late fees

  • No monthly fee if balance of $ 0

  • No foreign transaction fees

  • Fraud insurance

  • Automatic repayment options

Community first ‘n0w’

  • Cheapest monthly fees

  • Of no interest

  • No late fees

  • Available cash advances

Advantages and disadvantages of interest-free credit cards

Before cutting your regular credit card and deleting your BNPL accounts, there are still pros and cons to consider before opting for a zero rate credit card. Let’s discuss a few of them to help you decide if an interest-free credit card is as good as it looks, or if it might not be right for you.

Advantages: no interest is charged

Obviously, the main advantage of an interest-free credit card is that there is no interest to pay. According to the Reserve Bank of Australia (RBA), the average interest rate for a credit card is 19.94% per year. So, the idea of ​​removing this expense can be quite appealing.

Pro: No late payment

Another key benefit of interest-free credit cards is that there are no late fees charged. Typical late fees for credit cards can range from $ 10 to $ 30 per month. This added to interest charges can add up quickly.

Advantage: can be used anywhere, anytime

Zero interest credit cards can be used in stores, online, to pay bills – basically anything you can do with a regular credit card charge. This can make an interest-free credit card more convenient than some of the traditional BNPL platforms because not all merchants accept the same BNPL service. So instead of having to register on multiple BNPL platforms, you can use your single credit card to cover the costs. Also, you usually can’t use BNPL to cover things like bills or groceries – but with a credit card you can.

Downside: maybe not as cheap as you think

While the idea of ​​“no interest” and “no late fees” might sound appealing, it might not be as cost effective as it sounds.

For example, if you used $ 2,000 of your $ 3,000 credit limit on your NAB StaightUp card and paid it off by making the minimum repayment ($ 110) each month, it would take you just over 18 months. to pay off your card balance. During this time you will be billed $ 360 monthly fee.

But if you paid that amount in the same amount of time using a credit card with an interest rate of 9% pa, with no monthly fees or annual fees, you would pay $ 270 in interest charges.

So in this example, using NAB’s interest-free credit card, you end up paying an extra $ 90 compared to a basic low-interest credit card.

Disadvantage: Low credit card limit

In Australia, the average credit card limit is around $ 9,500 according to the RBA. But there are some credit card limits that range from $ 20,000 to $ 100,000. Compared to the zero rate credit card options currently available, the credit limits offered are quite low. However, it could be a pro, depending on how you see it – with a lower credit limit, you have less rope, so to speak, to run around and get in trouble.


Image by Clay Banks on Unsplash


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