Credit Card Reforms FAQs
What is happening?
The Australian Government has passed new legislation that will change the way interest is calculated on credit card purchases from 1 January 2019. From 1 January 2019, all Australian financial institutions will need to adopt a new way of calculating credit card interest based on interest-free days. We are getting in touch with you now, to allow you plenty of time to contact us with any queries.
What is changing?
At the moment, if you don’t pay off the full closing balance that appears on your monthly statement by the due date, interest is calculated on each purchase from the date the purchase was made. From 1 January 2019, if you don’t pay the full closing balance that appears on your card statement, interest on your purchases will be calculated from the day after your payment due date instead of being charged from the date of purchase.
Depending on how you use your credit card, this may mean you pay less interest. Transactions that are not eligible for interest-free periods, such as cash advances, will continue to attract interest from the date the transaction was made.
What does this change mean for me?
How you will be impacted by these reforms depends on how you manage your credit card. Take a look at the list below to see which situation best describes you:
- I always pay off my credit card in full each month
If you continue to pay off your card’s closing balance by the due date each month, you won’t be impacted by the new changes, and you will continue to pay zero interest on your credit card purchases.
- I missed paying my closing balance in full by the due date
You will only be charged interest on purchases from the day after the due date, up until you repay the total amount owing in full. This may mean that you pay less interest than in the past.
- I may be paying interest on existing purchases at 1 January 2019
These changes will not immediately impact you as nothing will change until you have paid your closing balance in full and regained the interest-free days.
From 1 January 2019, if you don’t pay the full closing balance by the due date on your card statement, you will only be charged interest on your outstanding balance from the day after the due date, rather than the date each purchase was made. Your card’s interest-free days will only be restarted if you pay the outstanding card balance in full.
Do I need to do anything?
There is no action required from you as the changes are happening at our end.
When will I see these changes reflected on my statement?
You will see these changes, as they apply to you, from your January 2019 statement onwards (Your January statement will be available in early February 2019. This will not change the date you receive your statement or your billing cycle.
Why is there a delay in implementing the changes?
Whilst the new legislation comes into effect on 1 January 2019, we have been granted an exemption by ASIC to 1 June 2019 to allow sufficient time for our computer systems to be ready for the change.
Why might I receive a refund?
As the Government’s new laws come into effect on 1 January 2019, we have been granted an exemption by ASIC until 1 June 2019 to enable us more time to have our computer systems ready for the change. We will keep you updated via your monthly card statement and our website. We are also committed to ensuring our members are not adversely affected, so rest assured, if we find you have been charged more interest between 1 January 2019 and 1 June 2019 than what you should have, we will refund you the overpayment.
How do I change my credit limit?
You can request to reduce the credit limit on your card at any time online by logging in to Internet Banking, clicking on the 'Inbox' tab and sending a new email to us with details of your limit reduction. Alternatively, you can complete our credit card limit reduction form available here, contact us on 1300 13 22 77 or visit your local Financial Services Store.
Please note that you are unable to reduce your limit any lower than your current available balance or lower than $1,000 which is the minimum credit limit If necessary, we may need to communicate with you the steps you must take prior to the limit reduction (for example paying off any amount that exceeds the requested limit).
How do I cancel my card?
You can request to close your credit card at any time online by logging in to Internet Banking, clicking on the 'Inbox' tab and sending a new email requesting us to cancel your credit card. Alternatively, you can contact us on 1300 13 22 77 or visit your local Financial Services Store.
If you request to close your credit card we will process this as soon as we can. As part of finalising the closure, we may need to communicate with you the steps you must take prior to us closing the card (for example reducing your balance).
What is a closing balance?
A closing balance is the total amount outstanding on a credit card account relating to credit provided in respect of purchases, together with certain fees, interest charges and other charges.
How do interest free periods work?
An interest-free period is the maximum possible length of time between the first day of a statement period and the payment due date.
If your account has an interest-free period on purchases, you can avoid paying interest on the closing balance by always paying the full amount shown on each statement by the due date. If you don’t pay the full amount shown on your statement by the due date, the closing balance will attract interest.
From 1 January 2019, if you start being charged interest on your closing balance, you may regain the benefit of interest-free days on your purchases by clearing any outstanding balance plus interest on the account by payment due date or at any time within the statement cycle.
It’s important to note the number of interest-free days (e.g. up to 55 interest-free days) refers to the maximum number of interest-free days available on a purchase – not 55 days from the date a purchase is made. Thus, to receive the full 55 days interest-free, you would need to make your purchase on the first day of your statement period, such as 1st of January.