Debit With Interest
Sydney Morning Herald
Wednesday July 28, 1999
What it is NRMA's Visa card.
How it works NRMA claims this is the first credit card in Australia to offer a tiered interest rate on outstanding balances. The more you owe, the lower the rate. It also pays interest on credit balances of more than $2,000, rewarding those who choose to pre-fund their spending or use it as a debit card. The rate is that applying to NRMA's cash-management account - currently 2.75 per cent.
You can choose a card with up to 45 days interest free or one with no interest-free days. There is a reward program, with bonus points for spending with NRMA and bonus partners (including Hyatt, Parkroyal, Travelodge, Goldmark, Repco, Beaurepaires and Collins Booksellers).
The card will also carry your NRMA membership details.
What it costs A $25 card fee is waived in the first year. The interest rates on the card with interest-free days are 14.9 per cent on balances up to $1,999, 13.9 per cent on balances of $2,000 to $3,999, and 12.9 per cent on balances of $4,000 plus. Comparable rates on the card with no interest-free days are 13.9 per cent, 12.9 per cent and11.9 per cent.
There is no fee for joining the reward program.
You can transfer balances from other accounts (a 9.5 per cent rate applies on this money for the first six months or until paid off).
The Pros Even the highest interest rates charged on this card are competitive, and if you are in the habit of carrying forward large balances, there may be an interest-rate advantage.
You get one reward point for every dollar spent and you can claim rewards by obtaining rebates on NRMA products with as little as 1,000 points. You also gain free access to NRMA's benefits program, which offers deals at more than 600 outlets.
The fact that the card pays interest on credit balances is a positive, although note that the rate is just 2.75 per cent.
It is widely accepted.
The Cons NRMA does not yet have an airline partner for its reward program, although it says negotiations are underway.
The card offers only up to 45 interest-free days compared with 55 offered by most competitors (it should be noted that ANZ cards, including the Qantas Telstra Visa card, offer only 44 days).
There are concerns that the tiered interest-rate structure will encourage customers to carry outstanding balances rather than reduce them, although the rates are sufficiently high to provide a deterrent to such habits. NRMA says it will also be conservative in its credit assessment.
Where it fits in Australians are spending on the card with gusto. Commonwealth Bank and Woolworths say a credit card will be an early result of their partnership. Expect to see more coming onto the market.
© 1999 Sydney Morning Herald
