A non-major bank has launched a “ground breaking” credit card whose interest rate is tied to the official cash rate, meaning that customer’s interest rate would only change if the Reserve Bank moves the cash rate.
Following off the back of its RBA Rate Tracker Home Loan, Auswide Bank has now released a Low Rate Visa credit card which comes with a floor rate of 7.95 per cent per annum, plus the percentage of the official cash rate.
Given that the cash rate has been held at its record low level of 1.50 per cent for the past two years (however, RBA governor Philip Lowe has said recently that the next movement in the cash rate would be an increase, should the economy strengthens and income growth and inflation lift), this would mean that customers would be charged an annual interest rate of 9.45 per cent.
Auswide Bank added that should the cash rate ever reach 0 per cent or below, the credit card floor rate of 7.95 per cent would apply.
The agreed rate would apply to both purchases and cash advances.
The card also comes with an annual fee of $50 per year, which is waived for those under the age of 25.
According to the bank, the “unheard of” rate tracker feature would provide customers with “certainty”, as they would know when (if at all) their rate would change.
Chief customer officer Damian Hearne commented: “In a crowded credit card environment, it was very important for us to consider how our card would compare and rate against others in the market place.
“We think our Low Rate Visa credit card is superior in rate and also offers certainty to customers across Australia who are looking to manage their finances more affordably.”
Mr Hearne added that given the launch of the bank’s rate tracker home loan, it believed that “with a similar feature for credit cards, that this will prove highly popular”.
The federal government has released final regulations that define...
Nearly a quarter of those Australians who have dipped into their ...
The association for customer-owned banks has said that the MOU be...