The way we calculate credit card interest is changing

The Australian Government has passed new legislation that will change the way we calculate interest on credit card purchases from 1 January 2019.

Currently, when you do not pay the full closing balance as shown on your statement, interest for purchases is calculated from the date the purchase was made.

From 1 January 2019, if you do not pay the full closing balance as shown on your statement, interest for purchases will start being calculated from the day after the payment due date.

As a result of this change, you may pay less interest.

Whilst the new legislation comes into effect on 1 January 2019, due to IT system constraints, the implementation of law reforms relating to charging interest on credit card accounts has been delayed until 1 June 2019.

To ensure that you are not adversely affected, we may refund some interest charged between 1 January 2019 to 1 June 2019. This refund is to ensure that you are not charged more interest than if the law reforms had been implemented from 1 January 2019.

What does this change mean for me?

The new way of calculating interest on purchase balances will affect you differently depending on your own personal circumstance.

a)  For those who pay their closing balance in full every month.

If you continue to pay off your closing balance in full every month by the due date you will not be directly impacted, and you will continue to pay no interest on purchases.

b) For those currently paying interest on existing purchase.

These changes will not immediately impact you as nothing will change until you have paid your closing balance in full and regain the interest-free days.

c)  For those who generally pay their closing balance in full but sometimes miss a full payment and pay interest on purchases.

From 1 January 2019, if you do not pay off your closing balance in full by the payment due date you will start incurring interest from the next day. Once the most recent closing statement balance or current balance plus interest is paid off in full, the interest-free period will resume from your next retail purchase.

The changes in detail

The illustration below shows how your interest is currently calculated.

 

The illustration below shows how your interest will be calculated between 1 January 2019 up to 1 June 2019 with interest refunds. This will only affect members that operate their credit card under scenario (C) above.​

 

The illustration below shows how your interest will be calculated from 1 June 2019. In the event that our IT system is compliant prior to 1 June 2019, we may implement the regulatory changes earlier. If this occurs, we will notify you of the revised implementation date via your monthly credit card statement.​

 

Frequently asked questions

Credit card reforms
What is happening?

The Australian Government has passed new legislation that will change the way we calculate interest on credit card purchases from 1 January 2019. From 1 January 2019, if you do not pay the full closing balance as shown on your statement, interest for purchases will start being calculated from the day after the payment due date.

What does this change mean for me?

The new way of calculating interest on purchases will affect you differently depending on your own personal circumstance.

(a) For those who pay their closing balance in full every month:

If you continue to pay off your closing balance in full every month by the due date you will not be directly impacted, and you will continue to pay no interest on purchases.

(b) For those currently paying interest on existing purchase:

These changes will not immediately impact you as nothing will change until you have paid your closing balance in full and regain the interest-free days.

(c) For those who generally pay their closing balance in full but sometimes miss a full payment and pay interest on purchases:

From 1 January 2019, if you do not pay off your closing balance in full by the payment due date you will start incurring interest from the next day. Once the most recent closing statement balance or current balance plus interest is paid off in full, the interest-free period will resume from your next retail purchase.

Is this related to the Rewarder fee changes earlier this year?

No. This is a regulatory change and not related to the fee changes.

Do I need to do anything?

There is no action required from you as the changes are happening at our end.

When will I see these changes reflected on my statement?

You will see these changes, as they apply to you, on your January 2019 statement. This will not change the date you receive your statement or your billing cycle.

Why is there a delay in implementing the changes?

Whilst the new legislation comes into effect on 1 January 2019, due to IT system constraints, the implementation of law reforms relating to charging interest on credit card accounts has been delayed until 1 June 2019.

To ensure that you are not adversely affected, we may refund some interest charged between 1 January 2019 to 1 June 2019. This refund is to ensure that you are not charged more interest than if the law reforms had been implemented from 1 January 2019.

In the event that our IT system is compliant prior to 1 June 2019, we may implement the regulatory changes earlier. If this occurs, we will notify you of the revised implementation date via your monthly credit card statement.

Changing my credit card limit

You can request to reduce the credit limit on your card at any time online via this form, via phone or at one of our branches. Please note that you are unable to reduce your limit any lower than your current balance or product minimum (see Terms and Conditions). We may need to communicate with you the steps you must take prior to the limit reduction (for example paying off any amount that exceeds the requested limit).

Cancelling my credit card

You can request to close your credit card at any time online via this form, via phone or at one of our branches.  If you request to close your credit card we will process this as soon as we can. As part of finalising the closure, we may need to communicate with you the steps you must take prior to us closing the card (for example reducing your balance).

If you change your mind and wish to reinstate your personal credit card, you will need to apply for a new personal credit card. This includes a new credit assessment.

What is a closing balance?

A closing balance is the total amount outstanding on a credit card account relating to credit provided in respect of purchases, together with certain fees, interest charges and other charges.

How do interest free periods work?

An interest-free period is the maximum possible length of time between the first day of a statement period and the payment due date.

A common misconception is that “up to 55 days interest-free” means you will have 55 days to pay off a purchase before any interest will be charged. However, your interest-free period actually starts from the first day of your statement cycle, not from the moment you make a purchase. Up to 55 days interest-free refers to the maximum number of interest-free days that may be available on a purchase. How many days you have depends on when you make a purchase during the statement cycle and the total number of days within that statement cycle (accounting for differences in the number of days within calendar months).

For example, if you wanted to take advantage of the maximum number of interest-free days available for a particular statement cycle, a purchase would need to be made on the first day of your statement cycle. However, if you made a purchase on day 20 of your statement cycle, you would only have up to 35 days interest-free. Keep in mind that to utilise the interest-free period on purchases you need to pay the full closing balance by the payment due date on every monthly statement. If you don't pay it in full each month, you don’t get your interest-free period. Furthermore, if you have a balance transfer that is currently unpaid, all other purchases will earn interest immediately, leaving you with no interest-free days.

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