Competition for new credit card business intensifies

National Australia Bank is the latest credit card issuer to offer an extended zero rate deal to encourage new business. NAB is offering zero interest on purchases for 15 months to consumers who apply for a NAB Low Rate Card before January 18.

The rate on balance transfers is 4.99 per cent for six months with a revert rate of 13.49 per cent. The card has an annual fee of A$59.

Credit card issuers are keen to build up their portfolios because arrears rates are low and margins are high. However, there is no growth in credit card spending or balances, and issuers have been offering longer intro deals to attract business.

According to comparison website Mozo, in the past couple of months Westpac has extended the zero interest balance transfer offer on its Low Rate Card from 12 to 14 months and NAB has launched a 15-month zero interest balance transfer deal in its Premium Card.

Citibank launched a stripped-down card called Citi Simplicity, offering zero interest on balance transfers for 12 months.

Mozo said that ANZ was maintaining a campaign it launched a few months ago, offering zero interest for 16 months on its Low Rate, Low Rate Platinum, First and Platinum cards.

Earlier this year, Mozo reported that zero interest balance transfer deals were becoming longer and more prevalent, with a record number of zero interest offers hitting the market in February.

It said that, before this year, most zero rate balance transfer offers were for six months or less, but now offers running for more than six months are more common.