National Bank of Australia Ltd. has become what is says is the first bank in Australia to reform the way in which it manages interest applied to payments and balance transfers on credit card accounts.
Under the reforms announced Sept. 27, the Melbourne-based issuer will apply customers’ credit card payments first against balances with the highest interest rates, helping them minimize the interest they pay. The bank also will revert all balance transfers to the lower purchase rate at the end of the period to reduce the interest cost.
The changes go into effect on Jan. 14 and will apply across all the bank’s more than 1.5 million consumer and commercial credit cards. They are consistent with those requested by consumer-advocacy groups and the federal government during the recent election campaign, according to the issuer.
Such changes could save Australian cardholders approximately AU$225 million (US$216 million or 160 million euros) per year in fees and interest if other issuers in the country adopt similar policies, the bank contends.
Last year, National Bank became the first financial institution to have abolished some of the most-unpopular fees, including over-limit fees on all its credit cards (
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