NAB, Commonwealth Bank launch no interest cards to counter POS credit trend

As no-cost buy now, pay later (BNPL) financing options apply pressure on traditional issuers, NAB and Commonwealth Bank of Australia (CBA) are rolling out no-interest credit cards.

NAB's product, the “StraightUp Card,” charges a flat monthly fee based on one of three credit line sizes offered to consumers, ranging in size from AU$1,000 to AU$3,000 (about $728 to $2,185). The card charges a customer when any portion of the line is used and charges no additional foreign exchange, annual or late fees. The monthly minimum payment includes the line fee plus a portion of the balance repayment.

“We started with a straightforward idea – to create a card with no interest, no annual fees and no late payment fees,” said Rachel Slade, group executive, Personal Banking at NAB, in a press release, adding the card can be used anywhere Visa is accepted online or in store. "Credit cards have not really evolved in recent years. But our customers’ needs and expectations are changing and we want to change with them.”

NAB also claims that unlike competitive BNPL services, the StraightUp Card offers a continuing line of credit. Since the line charges a monthly fee when used, it permits a customer to pay over longer periods of time. The StraightUp card does not support gambling payments.

In comparison, the Australian BNPL firm Afterpay, which is also in the U.S. Canada, the U.K. and Southern Europe, creates a BNPL credit line for each individual purchase that is repaid in four equal installments. It should be noted that the consumer does not pay for the Afterpay line (except for late fees). Other competitors such as Klarna offer both longer-term installment loans along with short-term no fee repayment plans.

The BNPL market has become extremely attractive leading to a massive industry growth replete with many new competitors. U.S. BNPL company Affirm is planning to do an IPO this year which could value the company as high as $10 billion.

The CBA credit card, called “CommBank Neo” has been announced, but not yet launched and looks similar to NAB’s StraightUp Card. The CommBank Neo also offers three credit lines which mirror the StraightUp Card and charges a monthly fee only when used. It too charges no interest, late, foreign exchange or other cardholder fees.

The StraightUp Card and the CommBank Neo Card do not allow for balance transfers, which means they are more intended for new purchases than rolling over existing credit card debt at high interest rates. Both cards also do not permit for cash advances, though CBA states some third party exceptions may apply.