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The Commonwealth Bank of Australia (CBA) has announced that it is launching a no-interest credit card for customers.
The card, called CommBank Neo, will provide customers with up to $3,000 of credit, with no interest payments, no late payments, no foreign currency fees and a fixed monthly fee.
The credit card includes three credit limits of $1,000, $2,000 and $3,000, and a monthly fee of $12 for the $1,000 limit, $18 for the $2,000 limit, and $22 for the $3,000 limit.
Other features include no cash advances and a waived monthly fee if the card is not used and the card balance is zero.
The credit card does not provide access to cash advances or gambling.
A minimum repayment of $25 or 2 per cent of a customer’s closing balance is stipulated with the use of the credit card, depending on which one is greater.
CommBank Neo will be available in late 2020, and can be used anywhere that Mastercard is accepted.
CBA has also flagged that it will make a credit card with a monthly flat fee available for small-business customers, called CommBank Neo Business, in early 2021.
Angus Sullivan, CBA’s group executive of retail banking services, said the card provides access to rewards via the CommBank Rewards loyalty program, which offers cashback offerings to selected retailers.
The major bank announced its no-interest credit card just hours after NAB announced the launch of Australia’s “first” no-interest credit card.
The products have come in response to competition from buy now, pay later (BNPL) services, which are seeing increased take-up among customers, particularly younger adults.
The new credit card products come at a time when the major banks are facing scrutiny in the House of Representatives standing committee on economics over the perceived opacity of the products’ fees and charges.
On Friday (11 September), Westpac CEO Peter King was questioned by the committee about whether the major bank would introduce a zero interest rate credit card, similar to those announced by NAB and CBA, in response to competition from BNPL services such as Afterpay.
Mr King responded that Westpac has not introduced the product.
Questioned by the committee about how the bank was responding to services such as Afterpay, Mr King said: “That’s a part of the market that we look at all the time.”
“We have different offerings, including what we call Flexi loans, but we will look at market developments over time, and if we see customers very interested, we will respond.”
Data released by the Reserve Bank of Australia has shown that the value of new payments platform transactions have risen by 192.4 per cent over the last 12 months to July.
However, the value of credit card retail payments over the same period has dropped by 14.3 per cent.
CBA is a player in the BNPL sector and holds a 5.5 per cent stake in Swedish provider Klarna, an increase from its initial 1.8 per cent stake.
It invested almost $300 million in Klarna Group, after an initial investment of over $148 million last year, in order to “increase strategic alignment, bring additional rights and gain exposure to Klarna’s international growth”.
[Related: Non-major bank launches Google Pay]
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