Credit Card Reform
Wednesday, 19 December 2018
The Australian Government has passed new legislation which changes the way all banks calculate interest for credit cards with interest free periods and ensures that customers have the right to reduce their credit limit or close their credit card account. These changes apply from 1 January 2019.
What’s changing with interest calculations
Customers who do not pay the full closing balance by the due date on their statement will only be charged interest on their outstanding balance from the day after the due date, rather than the date the purchase was made.
The new way of calculating of interest on purchase will affect customers in different ways, depending on whether you’re:
- Currently paying interest;
- Pay your credit card balances in full each month by the due date;
- Sometimes miss your payments
Reducing your limit or closing your account
In addition to the interest calculation changes, the new legislation also requires that all credit card contracts provide customers with a credit limit reduction entitlement as well as a credit card termination requirement. We have updated our credit card contracts to include these entitlements (with effect from 1 January 2019).
Additionally, we will be providing an online means for customers to be able to submit requests to reduce their credit limit as well as to terminate their credit card account. These requests can be made through Online Banking as well as through the Mobile App. You can also submit a request in-person in-branch.
How do I reduce my credit card limit or close my card account?
1.Lodge a request
In Online Banking, click on the “Services” tab, then “Card Management” and click either “Reduce credit limit” or “Close card account” and follow the steps.
In the Mobile App, click on “Card Management” in the main menu and then click either “Reduce credit limit” or “Close card account” and follow the steps.
Alternatively, you can complete the following forms and drop it into a branch or send via email:
Your new requested limit cannot be below our set minimum limits. Currently, for Lifestyle and Lifestyle Plus, the minimum credit limit is $1,000 and for Visa Platinum, $6,000.
You must also ensure that you pay down your credit card to the new requested limit. For example, if your current limit is $5,000 and you want to reduce this to $4,000 but you have $4,500 debited to your card, you will need to pay off $500 before we can process this request.
You must ensure that you have paid us back all amounts debited to your credit card before we can process your closure request.
What do the changes to interest calculations on credit cards mean for me?
Our credit cards that are currently eligible for interest free periods are our Visa Platinum Credit Card and our Lifestyle Plus Credit Card.
From 1 January 2019, customers who do not pay the full closing balance by the due date on their statement will only be charged interest on their outstanding balance from the day after the due date, rather than the date the purchase was made.
Other transactions which are not eligible for interest free periods, such as cash advances, continue to be charged interest from the date the transaction was made.
The new way of calculating interest on purchases will affect customers in different ways. Described below are three common scenarios.
I am currently paying interest
The change won’t immediately affect you as you’ll continue to pay interest as you do currently, until you regain the interest free period by paying the full closing balance by the applicable due date.
I pay my credit card balance in full each month by the due date
If you pay off your full closing balance each month, the change won’t directly impact you. You’ll continue to pay no interest on purchases, unless you lose the benefit of the interest free period by failing to pay the full closing balance by the due date.
I sometimes miss a payment
If you usually pay off your full closing balance each month, but sometimes miss a payment, the change will affect you. The good news is that you may pay less interest than under the previous method.
If you lose the benefit of the interest free period, you’ll only be charged interest on the outstanding balance from the day after the due date on your current statement. You can regain the benefit of the interest free period by paying the full closing balance by the due date of a subsequent statement of account.
Below is an example of how interest would be charged on purchases if you lose the benefit of an interest free.
If you have any further questions about this process, please contact us on 1300 747 747.