There’s more than one way to get rewards from your credit card. If collecting points is not your thing, why pay – via a high purchase interest rate and steep annual fee – for points you won’t ever use?
The true rewards that come with the NAB Low Rate Card are the low ongoing purchase interest rate, the very long promotional balance transfer offer, the higher-than-average (for NAB) interest-free days, and the very reasonable annual fee, waived in the first year.
If you’re in the market for a low interest credit card, it’s possibly because you expect that you will sometimes be unable to clear your purchases balance in full by the due date, or simply forget to make the payment on time. The result will be that you will forfeit your interest-free days on purchases until you repay your outstanding balance. This can be painfully expensive, with standard credit card interest rates in the region of 20%.
However, since the NAB Low Rate Card has a much more reasonable 12.99% p.a. interest rate, your interest payment would be much lower in the same situation. And if you are going to have long-term credit card debt and have run out of balance transfer options, paying 12.99% instead of around 20% is going to make an enormous difference.
Bring across to your new card any accumulated debt from your existing non-NAB card or cards, and take advantage of 0% interest on balance transfers for a long 32 months – one of the longest offers around. There’s also no upfront balance transfer fee to pay, and, as a result of NAB’s new balance transfer policy, you can retain your interest-free days on purchases by paying for any new purchases in full each month.
This is a major departure from the previous policy on most credit cards of taking away the interest-free days of any cardholder who carried a balance of any kind past the payment due date. Now, NAB will allow you to keep your interest-free days on new purchases in the next month, provided you make the full ‘interest-free days payment’ shown on your statement. The ‘interest-free days payment’ is the closing balance minus the remaining balance transfer amount – in other words, the total of all purchases and cash advances not yet cleared from the account. It means that you can make use of the balance transfer offer and still use your new card for purchases.
Do be aware, though, that after 32 months you will pay interest at 21.74% (the ongoing cash advance interest rate) on your balance transfer amount if you haven’t paid it off in full, so try to pay off substantially more than the ‘interest-free days payment’ each month. Alternatively, collect in a savings account the cash needed for full repayment by the end of the promotional period, in order to avoid the revert rate.
One of the downsides of NAB credit cards is that the vast majority of them come with only 44 interest-free days each month. But not this one. This is the only NAB card that comes with up to 55 interest-free days.
It may not sound like a big difference, but in fact it amounts to 132 days of extra credit each year. That’s an extra 132 days in which your hard-earned cash can remain in your savings or mortgage offset account, either earning a little interest or reducing your mortgage interest bill.
Bonus benefits, like frequent flyer and other reward scheme points, airport lounge passes and wide-ranging insurance cover, all come at a price. You will end up paying for them in the form of high purchase interest rates or, more likely, a high annual fee. With this very basic card, however, there’s none of this to pay for, and no complex rewards system to get your head around.
You will, however, receive lots of other benefits that make your card more convenient as well as more secure. You’ll be able to make contactless purchases up to $100 with Visa payWave, rely on NAB Defence to monitor fraudulent transactions, and take advantage of Verified by Visa online fraud protection service, as well as Visa Global Customer Assistance if you need emergency travel support.
Download the NAB app for more control over your card: One Touch ID lets you log in to your account with more security; you can block and unblock your card if you temporarily lose it (no need to cancel the card in this situation); you can turn payWave, online transactions and overseas transactions on and off with just a swipe; add NAB Pay for Android to your compatible phone to turn it into a Tap and Pay digital wallet.
While it’s possible to argue that a ‘no frills’ card like this one should have no annual fee at all, the $59 annual fee is pretty reasonable given that you’ll always get up to 55 interest-free days on purchases each month, provided you have no unpaid purchases and cash advances balance on your account. There’s also no annual fee for an additional cardholder, and you will get at least one complimentary benefit in the form of membership of Visa Entertainment’s pre-sales privileges and discounts for concerts, shows, movies and sporting events.
But, even better, the annual fee is waived in the first year. You can try out all the benefits of the card for 12 months and pay no fee.
NAB estimates that it will take you about 15 minutes to complete their online application form, and you’ll get a response in one minute after that. If your application is successful, you can expect to receive your card in the mail within five business days.
There’s no doubt that the uncomplicated NAB Low Rate Card is aimed at lower income earners, since there is no minimum income requirement and a minimum credit limit of $1,000. Frequent flyer and other rewards points collectors should look elsewhere, and if you expect anything other than basic Visa lifestyle benefits you won’t be impressed. But everyone, at any income or spending level, can find benefits in the combination of a long-lasting balance transfer offer, a low ongoing purchase interest rate (even if it’s only for when you’re forgetful) and a low annual fee.
Before you make your mind up, take a look at some competing cards with low purchase interest rates, for example the Bankwest Breeze Mastercard, the St.George Vertigo Visa and the Westpac Low Rate Credit Card.
Reviewed by Yvonne Taylor
Lead Product Analyst