CBA is considering a potential cut to credit card interest rates, in the wake of the coronavirus. Image by Erik Anderson/AAP PHOTOS

Financial Services

CBA ‘looking at’ cutting credit card rates

2020-03-24 08:54:24

Commonwealth Bank of Australia is “looking at” lowering interest rates on credit card debt as more people pull out the plastic to pay their bills during the coronavirus crisis.

CBA boss Matt Comyn has also reassured customers the bank will remain “open” during the crisis, which has prompted widespread shutdowns of businesses across the country.

“It’s critical we are able to give our customers certainty,” the head of Australia’s largest home loan lender told ABC radio on Monday.

Asked if the bank would lower interest rates on unsecured credit card debt, Mr Comyn did not rule it out.

“We certainly are looking at how we might price credit cards over this period,” he said.

The average credit card carries an interest rate of around 20 per cent. The average credit card debt in Australia is about $3,000 and the average card limit is $9,000.

Mr Comyn said so far only a “small number” of CBA customers had contacted the bank to take up an industry-wide offer of a six-month “holiday” on their mortgage repayments.

But there had been a lot of interest in the bank’s offer of short term loans up to $1000 to pay for “essential expenditure”, particularly from casual workers whose jobs have been shuttered or threatened by the pandemic.

These loans will attract an interest rate of about 4-5 per cent, which is less than half the normal rate for a personal loan before the virus hit.

And after the Reserve Bank of Australia cut official rates last week, Mr Comyn was also quizzed on why the bank only cut interest rates for fixed-rate mortgages and not the standard variable rate.

He said the bank was focused on providing interest rate relief for small businesses and giving older people with term deposits a bit of a boost.

CBA has about 45,000 staff and Mr Comyn on Monday said all would be kept on during the crisis.

The bank is also looking to hire another 500 service staff and has been in talks with Qantas boss Alan Joyce about taking on some of the airline’s workers, who will be temporarily stood down or forced on leave at the end of this month after it cut services.

“We are going to bring some of their staff on,” Mr Comyn said.