Beginning 13 September, NAB's new pricing changes take effect on its Low Fee, StraightUp and Qantas credit cards
The purchase rate for the major bank's Low Fee card has increased by 125 basis points to 20.99% p.a. - on par with the current highest purchase rate from all Big Four banks.
Customers seeking low fee options with the bank will now have limited choices, as NAB discontinued its Low Fee Platinum Card, effective on Friday.
Meanwhile, StraightUp cardholders with a credit limit between $1,001 and $2,000 will now face a $20 monthly fee, while those with a $2,001-$3,000 credit limit will have a $30 fee added to their balance per month.
There is no change to the $10 monthly fee for users with a $1,000 credit limit.
Operating like a subscription model, these monthly fees on StraightUp are only charged if customers have a debt owing or use their card within a statement period.
StraightUp is NAB's no-interest credit card, offering fixed minimum repayments based on the credit limit.
Additionally, NAB's Qantas Rewards cards now carry higher annual fees.
Premium customers paying $250 will now be charged $295 per year, while the annual fee for the Signature card is now $420, up from $395.
Monthly subscription-type cards appear to be becoming more prevalent in the market; Latitude Financial's popular 28 Degrees Mastercard moved to an $8 monthly fee a few months ago, while many of CBA's cards now attract a monthly fee unless a minimum spend is met.
Scant movements in the credit card space
The latest changes follow NAB's previous rate hikes applied to its Low Rate, Rewards, and Qantas cards in February.
Credit card interest rates do not tend to move in line with RBA decisions like home loans and savings accounts, and adjustments on card rates and fees have been few and far between this year as the cash rate remains at 4.35%.
In 2023, major banks have increased rates on select cards, thus bringing the current highest purchase rate to 20.99% p.a.
Since then, the market has been relatively quiet with only a few movements here and there.
A few months ago, CommBank's Bankwest amended its introductory offers and increased the purchase rates on its Zero and Breeze Mastercards while also announcing it will axe complementary travel insurance on some cards.
Aussies choosing debit over credit
Credit card use is becoming increasingly unpopular in the country, as more Australians opt for debit over credit.
The latest data from the RBA reveals a sustained decline in personal credit and charge accounts in Australia, totalling around 15 million in July, down by over 7 million compared to seven years ago.
Despite marginally increasing in July, total credit card balances ($41.54 billion) and balances accruing interest ($18.62 billion) have been tracking below pre-Covid levels, reflecting consumers' cautious approach towards credit reliance.
High interest rates and hefty fees, combined with the subscription-like models some banks implement for their credit cards, have been pushing many consumers away from using this product, opting instead to swipe (or tap) a different plastic - debit card.
Unlike credit cards, debit cards don't incur interest charges since purchases are deducted directly from the available balance in the account.
These cards also have lower fees overall, although some charge for overdrafts or out-of-network ATM withdrawals.
The gap between credit and debit card spending continues to widen further since the onset of the pandemic.
Debit card transactions in July amounted to $50.59 billion, markedly higher compared to $35.25 billion credit card spend in the same month.
Other alternatives to credit cards
Confirming Aussies decreasing appetite for credit, the latest InfoChoice survey found that personal credit products only ranked fourth among the most popular methods Australians are willing to take should their savings run out and they lose their income.
Struggling adults would rather go to charities for help (26.8%) or sell their homes (26.2%) to get them through financial hardship, with only 23.5% saying they would turn to credit cards or payday loans.
The majority (53.2%), however, would seek help from family and friends.
The decreased reliance on credit cards has also resulted in the fall of its share of debts Australians have.
The InfoChoice survey found that 61.5% of Aussies who had debt had a home loan, while 43.3% said they had credit card debt.
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