In the world of credit cards, ‘low rate’ is a relative term. Credit card interest rates are never going to be as low as bank personal loan or overdraft rates. So, although the ongoing purchase interest rate on the Westpac Low Rate Credit Card is not low in absolute terms, and is certainly not as low as that of some of its competitors, it’s still low enough for the infrequent user of credit beyond the normal interest-free days.
Bundled into a package from one of the Big Four, offering a long zero-interest balance transfer period, a high level of card security and access to hundreds of branches and thousands of ATMs nationwide, this card begins to look like a realistically competitive proposition.
Inside this review
13.74% p.a. ongoing on purchases if you need it, 0% p.a. if you don’t
Look at it this way. If you’re going to need regular, long-term credit to smooth out the bumps and troughs in your financial highway, a credit card is not the way to do it. Instead, talk to your bank manager about getting a loan or overdraft facility. (In the short term, however, a zero-interest balance transfer may help.)
Meanwhile, extract every last bit of value from your credit card by never paying a cent in interest if you can possibly avoid it. Exploit to the full the ‘up to 55 days interest free’ facility that comes with this card every month, by timing your regular credit card purchases and bill payments to occur at the very beginning of the statement cycle wherever possible. When the card’s payment due date arrives, a generous 55 days later, pay off your account balance in full and on time, and let the bank look elsewhere for its profit.
The 13.74% p.a. should be your temporary fallback position, a last resort when other finance sources are inaccessible. So lock in this lower rate because, if you miss a payment, you’ll end up paying credit card interest on your unpaid purchases until fully repaid, and in this situation you don’t want to be paying 20% p.a. or more. But there’s no need to go shopping for an even lower rate. Just plan to spend only what you can afford, pay on time, and be charged 0%.
0% p.a. for 28 months on balance transfers
For those who have temporary financial problems and need time to sort them out, a zero-interest balance transfer can be a godsend. Exorbitant interest rates on existing card balances can be avoided by transferring them to this card, and 28 months of breathing space should be more than long enough for a short-term debt situation to be turned around.
There’s a 1% upfront balance transfer fee to pay, which is on the low end of the typical fee charged. Many cards add a fee of between 1% and 3% of the transferred amount, charged to your new card account when the balance is transferred. You could save around $2,171 by transferring a $5,000 balance from a card where you are currently paying 20% p.a. on your debt.
If it’s likely to take more than 28 months to sort out, it’s a long-term problem, and once again credit card debt is not the solution but just something that will make a bad situation worse. The penalty for not clearing your debt after 28 months is the revert interest rate of 21.49% p.a., the card’s cash advance rate.
Don’t ignore the balance transfer offer, even if you don’t actually need it
Perhaps your financial affairs are well under control. This doesn’t mean that you can’t make use of an interest-free balance transfer. The major purchase that you have been planning for some time now — maybe new furniture or the latest technology — could be made on your existing card just before you transfer the balance. This will give you 28 months to squirrel away the repayments in a savings account (thus earning a little interest) so that you can clear the balance before it starts to accrue interest charges.
Retain interest-free days on purchases with SmartPlan repayments
The major downside to having an unpaid balance transfer is that, under normal circumstances, you will sacrifice the regular 55 interest-free days granted every month, for as long as the unpaid balance sits in your credit card account. This means you’d be well advised to have another payment method — cash, or another card — available for your ongoing purchases for the next 18 months.
But Westpac have come up with a clever deal that lets you have your cake and eat it. That is, have an unpaid interest-free balance transfer, and still qualify for those 55 interest-free days on your monthly purchases. Here’s how it works:
- Commit to monthly SmartPlan repayments that will see your transferred balance cleared by the end of the promotional period. For example, if you transferred a balance of $5,000 you would have to commit to monthly repayments of $5,000/18 = $278, instead of making only the required minimum repayment of 2%. (A 2% monthly repayment would start at $100 and decline as the balance was reduced.)
- Make purchases as normal with your card and enjoy up to 55 days interest free each month, provided that at the end of each month you pay off your purchases balance in full plus the higher balance transfer repayment you have committed to.
- You can set up a SmartPlan for your balance transfer repayments online using Westpac Live, and you may also choose to set up Card Autopay so that you never miss a repayment.
- SmartPlan is also available for paying off large individual purchases of $500 or more. In this case, as well as retaining your interest-free days, you would also be charged no interest on your selected purchase, as long as you commit to paying off the purchase amount within three, six or 12 months. An upfront establishment fee is payable, of 1% of the purchase amount for a three-month SmartPlan, 2% for a six-month SmartPlan, and 4% for a 12-month SmartPlan.
- You can have up to eight current SmartPlans on your card.
Cutting-edge protection and digital capability
The card’s functionality and security does not begin and end with the piece of plastic in your wallet. Here are just some of the ways in which Westpac is employing the latest technology to keep you safe and informed when using your card account:
- Embedded chip for extra card security.
- Visa payWave enabled, for speeding through the checkout when a transaction is below $100.
- Not just internet banking, but totally mobile banking with the Westpac Mobile Banking app and optional fingerprint sign-in. Use your phone to Tap and Pay, or for a quick account balance, or to temporarily lock your card if you lose it.
- Complimentary mobile alert service: 24/7 SMS balance alerts and payment reminders, to avoid unnecessary fees and interest charges.
- ‘Verified by Visa’ sends a one-time password by SMS for secure authentication when you shop online.
- Fraud Money Back Guarantee ensures you are reimbursed for any fraudulent transactions that were not your fault, provided they are promptly notified to Westpac.
Annual fee waived for first year, then $59
The annual fee is waived for the first year and then will be charged at $59 p.a. Although $59 is not a particularly high fee (and there’s no additional charge for a supplementary card), you may wonder why you are paying any fee at all for a card with no rewards points or complimentary insurance.
In fact, the $59 fee will pay for the backing of a Big Four bank, with branches and ATMs almost everywhere you go, and the confidence that the card is protected by state-of the-art security as well as powered by the latest technology, including mobile wallet capability with your phone. It’s comforting to know that when the technology advances, so will your card’s features.
The Big Four keep an eye on each other’s low-rate credit cards. Consequently, they make very similar offers. But you will still find some differences between this Westpac card and the NAB Low Rate Card, the Commonwealth Bank Low Rate Credit Card, and the ANZ Low Rate Mastercard.
Compare the features of these low-interest cards, and many others, on the low interest page.
If you’re looking for a low-rate, secure, and technologically-proficient credit card backed by a financial giant, with an appealing combination of a long zero-interest balance transfer and an ongoing low purchases interest rate, you’ve found it. And the SmartPlan is an innovation that makes a zero-interest balance transfer more attractive than ever.