NAB dares rivals to follow lead
(23 June 2011 – Australia) National Australia Bank (NAB) is challenging rivals to match its credit card changes to both new and existing accounts, in a move that could collectively save those banks’ customers up to A$225 million.
Credit card reforms proposed by the federal government were passed by parliament's lower house on Wednesday after receiving opposition support.
Under the changes, unsolicited credit limit upgrades will be banned, while over-the-limit fees would be scaled back.
Banks will also have to alter 'payment hierarchies', which effectively direct customer repayments to the credit card debt with the highest interest rates.
The legislative changes apply only to new credit card accounts, despite a last-minute bid by the Greens to have the laws applied to existing accounts.
However, NAB has already abolished over-the-limit charges and reduced its late payment fees from A$30 to A$5 for both new and existing accounts and it is daring its rivals to follow suit.
NAB head of personal banking Lisa Gray said the bank's move to cut the charges ahead of the government's changes had benefited the bank.
'The other banks should not be waiting for new laws to reform their credit card practices,' Ms Gray said.
'Our personal banking customers have already saved about A$60m as a result of our reforms to our credit cards last year.'
In a separate speech on Wednesday delivered to investors, NAB head of business banking Joseph Healy said the bank faced increased competition from rivals hoping to gain market share.
'There's no doubt that the other banks are trying to grow their market share in the business banking area and they are using price as a lever, that's a fact,' Mr Healy said.
'But we have built our approach on a relationship basis and that has made us less sensitive to price movement than would be the case at the other banks.'
Under the changes, unsolicited credit limit upgrades will be banned, while over-the-limit fees would be scaled back.
Banks will also have to alter 'payment hierarchies', which effectively direct customer repayments to the credit card debt with the highest interest rates.
The legislative changes apply only to new credit card accounts, despite a last-minute bid by the Greens to have the laws applied to existing accounts.
However, NAB has already abolished over-the-limit charges and reduced its late payment fees from A$30 to A$5 for both new and existing accounts and it is daring its rivals to follow suit.
NAB head of personal banking Lisa Gray said the bank's move to cut the charges ahead of the government's changes had benefited the bank.
'The other banks should not be waiting for new laws to reform their credit card practices,' Ms Gray said.
'Our personal banking customers have already saved about A$60m as a result of our reforms to our credit cards last year.'
In a separate speech on Wednesday delivered to investors, NAB head of business banking Joseph Healy said the bank faced increased competition from rivals hoping to gain market share.
'There's no doubt that the other banks are trying to grow their market share in the business banking area and they are using price as a lever, that's a fact,' Mr Healy said.
'But we have built our approach on a relationship basis and that has made us less sensitive to price movement than would be the case at the other banks.'
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