A Capital One spokesperson told Reuters journalists that "these kinds of transactions can be risky for customers and the banks that serve them".

That's coming from a company with credit card products featuring interest rates as high as 26.99% p.a.

Afterpay told Reuters that Capital One's decision affects only a "small percentage of Afterpay customers". 

Capital One debit cards remain unaffected.

Need somewhere to store cash and earn interest? The table below features savings accounts with some of the highest interest rates on the market.

Provider

4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • Bonus rate for the first 4 months from account opening
  • No account keeping fees
  • No minimum balance

High Interest Savings Account (< $250k)

  • Bonus rate for the first 4 months from account opening
  • No account keeping fees
  • No minimum balance
010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

Savings Maximiser (<$100k)

    010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
    • Earn up to 5.40% pa by depositing $1,000 in the previous month
    • No account fees
    • Easy access to your money

    Saver Account (<$250k)

    • Earn up to 5.40% pa by depositing $1,000 in the previous month
    • No account fees
    • Easy access to your money
    4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
    • A high-interest online savings account with no monthly fees, easy withdrawals and award-winning digital banking
    • No withdrawal notice periods or interest rate penalties

    Savings Account (Amounts < $250k)

    • A high-interest online savings account with no monthly fees, easy withdrawals and award-winning digital banking
    • No withdrawal notice periods or interest rate penalties
    05001$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
    • Maximum Age - 24

    Goal Saver

    • Maximum Age - 24
    02000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
    No monthly fees
    • Download the App to open your account
    • Get better visibility of your spending within App!
    • Deposit $200 per month to activate bonus interest
    No monthly fees

    Save Account

    • Download the App to open your account
    • Get better visibility of your spending within App!
    • Deposit $200 per month to activate bonus interest
    0200$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
    • No fees or penalties for withdrawing money
    • Savings guaranteed up to $250,000
    • Maximise your savings and reach your goals faster with Auto-Savings

    Bonus Saver Account (Amounts < $250k)

    • No fees or penalties for withdrawing money
    • Savings guaranteed up to $250,000
    • Maximise your savings and reach your goals faster with Auto-Savings
    010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
    For customers aged 14-35 years
    For customers aged 14-35 years

    Future Saver Account ( < $50k)

      010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

      Boost Saver

        Important Information and Comparison Rate Warning

        All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here. Rates correct as of April 14, 2024. View disclaimer.

        Back home, a few months ago CommBank and NAB launched their own 'zero interest' credit cards to compete with buy now, pay later (BNPL) platforms.

        BNPL platforms are currently not credit regulated because they do not charge interest, and repayments are usually limited to four installments, however there are late fees.

        There is concern further regulation could hamper innovation, and that banning BNPL outright could force customers into using riskier payday lending.

        However, for former Diners Club and Citi executive Grant Halverson, the writing is on the wall.

        "CapOne doesn't want to wear the BNPL bad debt so is pushing it back to BNPL apps," he told Savings.com.au.

        "The timing is relevant - with 80 million cards CapOne is also looking at the deteriorating virus situation, US labour market and large unemployment.

        "This will create even higher bad debts for BNPL in the US and you would assume other major issuers - JP Morgan, Citi, and Bank of America - all of whom have over 100 million cards, will follow but may not disclose it."

        Mr Halverson also said this is not a cynical decision to clamp down on a competitor, as the credit card industry in the US dwarfs the BNPL sector.

        "This is purely a CapOne credit/risk decision based on wearing other lenders' risks - they do the same with payday lenders," he said.

        "BNPL is so small in the US it doesn't rate."

        United States credit card transactions totalled nearly US $4 trillion in the year to date up to October, out of $97 trillion total transactions.

        BNPL made up just 0.01% of total transactions, according to The Futurist Group.

        This is compared to Australia's credit card use at AUD $245 billion year to date, and BNPL use at AUD $8.9 million.

        Credit cards vs BNPL: Debt is down ... or is it?

        Reserve Bank data indicates Australians spent $24.6 billion on credit cards in October, with November data yet to be released.

        That figure is the highest point since before the pandemic kicked off - in March, credit card spend was about $25.5 billion.

        'Balances accruing interest' - i.e. credit card debt - continued to fall in October, however, down to a touch over $21 billion.

        You'd have to go back to January 2005 to see a figure that low, though, $21 billion in 2005 dollars is worth about $29 billion today.

        According to big banks’ credit card trackers, spending was up over the Black Friday period, coinciding with restrictions easing in Victoria and South Australia.

        However, while credit card debt appears to be trending down, the debt could be transferred to the BNPL sector.

        The financial regulator reported 20% of BNPL users are missing repayments.

        Zip's 'Weekly Spending Index' indicates home services spending was up 76% in October, compared to October 2019.

        Petrol & service stations spending was up 55%, skin care up 27%, and household appliances up 25%, but was down on gyms, party planning, ATMs, and pubs and bars.

        Zip's index is a granular analysis of more than 1.5 million customers on the platform, as well as 300,000 Pocketbook users.