With the latest data, it doesn’t appear rates are going to be...

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stonks92

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07/04/24

19:15

Post #: 73228964
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Originally posted by TB51: ↑

CBA joins banks quietly cutting interest-free days on credit cards.
Spenders with Commonwealth Bank’s rewards credit cards received a surprise notification last week, declaring the interest-free period on the popular products had been slashed from 55 to 44 days.
The impact of the change? Customers who use the cards to accumulate points but clear their debts by the end of the interest-free period will have less time to pay the bank back.
And customers who don’t repay on time – or forget to – will be charged interest on everything they owe, 11 days earlier. This will help CBA lift income from interest.
Over the past six months, the big banks have all been slowly lifting their rates, while CBA and Westpac have also increased annual fees, according to analysis by RateCity.
Still, across the sector, credit cards provide banks with healthy fees. Indeed, credit cards overtook housing loans last year as the largest source of bank fee income from households, according to the Reserve Bank – $1.4 billion was paid in credit card fees over the last financial year.
Individual banks don’t report the amount of interest income they receive from balances on credit cards paying interest. Total credit card debt in Australia is about $41 billion, down from a peak of $52 billion in 2018, according figures compiled by the RBA.
“The credit card jumps to the top of the credit hierarchy – it puts food on the table and petrol in the car, with some flexibility in minimum repayment. [It’s] household working capital.
The credit card jumps to the top of the credit hierarchy – it puts food on the table and petrol in the car, with some flexibility in minimum repayment. [It’s] household working capital.”
Another challenge for the credit card market is regulatory risk. ANZ settled a card class action last month, relating to interest charged on personal credit cards, for $57.5 million without admission of liability.
The bank had allegedly charged interest between July 2010 and January 2019 on credit card purchases that should have been interest-free.

Bank-issued credit cards also face renewed pressure from buy now, pay later, which has reported resilient volumes this year.

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With the latest data, it doesn’t appear rates are going to be cut anytime soon, so I don’t blame CBA for wanting to increase profits. People won’t leave CBA though with these changes. Unlike ZIP who would go bankrupt with similar changes due to a mass loss of customers.

ZIP Price at posting: $1.26 Sentiment: None Disclosure: Not Held
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0 Great analysis

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