NAB to extend interest-free days to credit card customers with balance transfers

Seeking relief from ever-growing debt? If you’ve been thinking of moving to a balance transfer credit card to clear your debts faster, big bank NAB will soon have a handy feature for you. 

From 30 March 2020, NAB will become one of the few Australian credit card providers to give customers access to interest-free days on purchases while they’re still carrying a balance transfer. It joins just 6 out of 46 balance transfer (BT) card providers in Mozo’s database to offer customers this option. 

Gone are the days when you would have to clear your balance transfer first before spending money on your new plastic, just to avoid interest charges on those purchases. NAB customers will be able to do both on the one card - and they won’t have to spend a single cent on interest, as long as they keep paying off the balance on their credit card purchases in full and on time every month.

This monthly balance - which you’ll need to fully repay to qualify for the interest-free days - will automatically appear on your NAB statements from 30 March onwards, under a new payment option listed as ‘interest-free days payment’.

A win-win situation 

Mozo’s Banking Expert, Peter Marshall, said NAB’s new arrangement is a huge positive for customers who otherwise may have had to take out two credit cards - one for interest-free purchases to put inside their wallet and the other for balance transfers to leave at home. 

“With this new arrangement, you’ll no longer have to juggle two cards and potentially pay two annual fees. It also makes your potential for getting into financial difficulty a lot lower, since you’ll have less approved credit under your belt,” he said. 

“This even helps if you’re looking to get a home loan, since lenders will see your credit limit as potential debt that might get in the way of you being able to service your home loan.” 

RELATED ARTICLE: 8 ways to boost your chances of loan approval 

NAB isn’t alone in the game. According to Marshall, a number of BT card providers over the last couple of years have introduced similar arrangements around interest-free days to their BT cards - and it’s been a decision that has benefitted the banks as much as the customer. 

“It gives customers more incentive to stay, as they don’t feel the need to go to a competitor to pick out another credit card for interest-free purchases. This helps the credit card provider build a stronger relationship with their customers,” he explained. 

“There have also been some criticism of the banks in the past over the practice of not offering interest-free days when people have balance transfers. So I think this is an instance of banks trying to do the right thing.” 

Balance transfer traps to watch out for

Aiming to ditch your debt this year? If you’re looking to go the balance transfer route, here are a couple of things to keep in mind: 

• • The revert rate: While it might be tempting to only make the minimum repayment or 'interest-free days payment' every month, you run the risk of not being able to pay off your transferred balance before the introductory or honeymoon period ends and you’re hit with a much higher revert rate. For instance, while NAB’s Low Rate Card and Low Rate Platinum Card offer a 0% p.a. balance transfer rate, this rate jumps up to 21.74% p.a. after the first 6 months! That’s why it’s important to have a good payment plan in place to make sure you can pay off your entire balance while the rate still sits at 0%. 

• • The transfer fee: Balance transfer fees can range from 1%-3% of the balance you’re transferring and they’re usually charged for BT cards with longer interest-rate periods, like 18-26 months. NAB’s Low Rate Card and Low Rate Platinum Card come with a 2% transfer fee, which you’ll have to factor in when you’re moving debt around - but the good news is, there are also BT cards with no transfer fees! 

Ready to switch to a balance transfer card today? Then make your first stop our balance transfer credit cards comparison table! 

^For more information on the winners, head over to our Mozo Experts Credit Card Awards page.