Commonwealth Bank is set to introduce steeper fees and interest charges on customers using its credit cards, following a wide-ranging pricing review.
The bank last week wrote to customers notifying them of a decision to restructure annual fees on a range of its personal credit card products.
The effect of the change will be material for cardholders because it will result in fees rising by between 22 per cent and 62 per cent on several of the bank’s most popular credit cards from 25 August.
CBA yesterday published details of the fees and pricing overhaul on its website.
Holders of the bank’s “Awards” Mastercard credit card will be hardest hit by the changes.
From 25 August the annual fee on the Awards card will rise to A$96 which will be payable in twelve monthly instalments of $8. Awards cardholders currently incur an annual fee of $59.
The bank has also notified Awards cardholders in letters sent last week that they will have to pay a separate annual fee of $60 if they want to opt-in for the Qantas points program.
Customers currently pay an annual fee of $30 to opt-in to the Qantas program.
Cash advance fees will also rise to $4 from $3 for Awards customers.
From 25 August, the interest rate on cash advances for Awards card holders will increase to 21.99 per cent from 21.24 per cent.
CBA is also hiking the cost of using its popular Low Rate Mastercard, which currently levies 13.24 per cent interest on purchases.
That rate will rise to 13.99 per cent from 25 August.
The annual fee on the Low Rate card will also change to a more expensive monthly structure.
While CBA currently collects an annual fee of $59 on the Low Rate card, this will increase to $72 payable in 12 monthly fee instalments of $6.
Low Rate cardholders will also incur higher fees and rates on cash advances in line with the revised pricing for Awards customers.
The bank is also moving to make it harder for holders of the Low Fee credit card to avoid incurring fees.
CBA currently requires holders of this product to spend at least $1000 in the previous year for the annual fee to be waived.
That qualifying requirement is about to change – significantly.
From 25 August, Low Fee cardholders will have to spend at least $300 a month on the card to avoid a $3 monthly fee.
The purchase interest rate on the card will not change from the current pricing of 19.74 per cent.
However, cardholders will incur higher costs for cash advances, with the fee on such transactions rising to $4 from $3 and the interest rate increasing to 21.99 per cent from 21.24 per cent.
CBA’s controversial move to increase the cost of using its credit cards follows a strategic review of its product suite earlier this year.
The review resulted in the withdrawal of two loyalty cards from the market and three other products.