CommBank’s interest-free credit card surges in popularity amongst millennials

neo-credit-card

In December 2020, CommBank launched its interest-free credit card Neo with the hopes of reeling in younger Aussies who feared the classic credit card. 

And according to recent figures from the major bank, they’ve managed to knock that task out of the park. 

CommBank found that one third of all credit card approvals in December were for the Neo interest-free credit card, while the bank notes that more than half of the card’s uptake alone, came from millennials. 

A quick recap: the CommBank Neo credit card features no interest rate or late payment fees. In exchange for this, customers are charged a monthly fee based on their chosen credit limit. The credit card fees and limits are as follows:

  • $12 monthly fee for $1,000 credit limit 
  • $18 monthly fee for $2,000 credit limit 
  • $22 monthly fee for $3,000 credit limit.

“It’s obvious and right to observe your traditional vanilla credit card offering is seeing some challenges at the moment,” said CBA retail banking executive Angus Sullivan. 

“There has been an innovation around the way you structure (credit) … and I think Neo taps into that. It’s really easy for customers to get their head around it.”

RELATED: Are no interest credit cards worth it?

Millennials keen to adopt credit alternatives

Aside from interest-free credit cards, data has shown that Aussie millennials are also turning to Buy Now, Pay Later (BNPL) as their preferred payment choice. 

In fact, according to Mozo’s Credit Card Perks and Pitfalls report, millennials represent 53% of BNPL users, while the 2019 Illion Credit Card Nation report found that this generation only make up 10% of the credit card market.

Mozo Director, Kirsty Lamont says this range of innovative payment options could be positively shaping the average millennial’s financial future. 

“With the rise of neobanks and alternative payment methods, like BNPL on their side, millennials are confidently stepping into the new age of personal finance,” she said. 

“BNPL has changed the face of the way we pay for goods with more than 25% of users cancelling their credit card and a further 23% saying they no longer use it.”

Want to find out how the CommBank Neo credit card stacks up to other plastic options on the market? Then make your next stop our credit card comparison tool!

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