New 'zero interest' credit card a market-first for credit unions

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on October 22, 2021
New 'zero interest' credit card a market-first for credit unions

Community First joins Westpac, NAB, and CommBank as the only credit union to offer 'zero interest' credit cards.

Zero-interest credit card are generally designed to compete with BNPL products, offering 'extremely competitive' monthly fees, no late fees, and cash advances.

Community First is the first credit union to launch its own interest-free credit card - 'n0w' - with monthly fees 'well below' those charged by banks.

This comes just days after Westpac launched its own zero-interest credit card, after NAB and CommBank launched their own last year.

Community First's product also has no late payment fees, and cash advances.

Monthly fees are charged based on the user's chosen credit card limit broken down into three tiers:

  • Credit card limit of $1,000: $9 monthly fee
  • Credit card limit of $2,000: $14 monthly fee
  • Credit card limit of $3,000: $19 monthly fee

For the $1,000 limit, this is $1 lower than Westpac's and NAB's monthly fees, and $3 lower than CommBank's.

Its $2,000 limit monthly fee is $1 lower than NAB and $4 lower than CommBank, while its $3,000 limit monthly fee is $3 and $1 cheaper respectively.

John Tancevski, CEO of Community First Credit Union, said the 'n0w' card will compete with traditional credit cards but target consumers looking for simplicity, no interest, and no late fees.

"n0w is also the only interest-free card in the market that allows for cash advances, and it will appeal to people who don’t like traditional credit cards, as card users don’t need to track interest-free days or worry about late fees," Mr Tancevski said.

Alternative to BNPL for 'financially savvy' Millennials

Mr Tancevski said the product is an alternative to buy now, pay later (BNPL) products popular among Millennials.

"Younger Australians are increasingly shunning traditional credit cards in favour of alternative payment methods such as BNPL," Mr Tancevski said.

"However, with BNPL products, shoppers generally must pay back their debts in relatively quick-fire instalments and will be hit with fees if they are late with repayments."

According to data released in May 2021 by wage advance provider 'Beforepay', 53% of BNPL users are millennial or younger.

On the other hand, 6.9% of its users under 35 years old have a credit card.

"Plus, relying on BNPL solutions can also restrict where you shop or result in you having to sign up to multiple BNPL services for greater shopping choice," Mr Tancevski said.

"We are putting the purchasing power back in the hands of the consumer as n0w cardholders can shop guilt-free knowing there is no interest to pay and that they can shop anywhere Visa is accepted, worldwide."


Image by Clay Banks on Unsplash

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Rachel is a Finance Journalist, and joined Savings in 2021. Coming from a background in the FinTech space, her interests include the innovation of lending technology, property, investing, and more. With a passion for educating and informing people about their finances, she hopes to increase the financial literacy of everyday Australians.

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