The new interest-free credit cards taking on Afterpay


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The banks are taking off the gloves in their fight for market share with the buy now, pay later (BNPL) providers, with National Australia Bank (NAB) and Commonwealth Bank (CBA) both rolling out no interest credit cards.

On Thursday, NAB launched the StraightUp Card. For a monthly fee, depending on the card's limit, customers can access up to $3000 of credit. There's no additional annual fee, late payment fee, annual fees, or late payment fees. And if you don't use it, you won't be charged the monthly fee.

"Credit cards have not really evolved in recent years. But our customers' needs and expectations are changing and we want to change with them," says NAB's Rachel Slade.

interest free credit cards cba nab

"In the NAB StraightUp Card, we've created something completely different to every other credit card available today, with a simpler approach that makes it easy for customers to take control of their finances."

They weren't alone for long.

CBA quickly followed suit with its own equivalent - the Commbank Neo. Customers can get it in credit limits of $1000, $2000 and $3000, with monthly fees of $12, $18 and $22 respectively. Like the NAB card, it does away with late fees, forex foreign exchange fees, and the monthly fee if the card isn't used in any given month.

While the banks claim the new cards have been released to modernise the credit card space, it's clearly a response to the booming popularity of Afterpay among younger consumers, with NAB pointing to research that looks at the evolving spending and saving behaviours of 18-34-year-olds.

"Following the havoc that BNPL services have unleashed on the credit industry, it was only a matter of time before credit card providers charged back with a competitive product," says Kirsty Lamont from Mozo.

"NAB's StraightUp card turns conventional credit cards on their head by not having an interest rate and offering features similar to BNPL services.

"This new breed of charge card will be great for competition and unlike BNPL services, it will be covered by the credit code. This is in stark contrast to BNPL services that are self-regulated."

The move also won praise from consumer advocacy CHOICE as a "step in the right direction".

"For too long, banks have profited from the complexity of credit cards," says Patrick Veyret from CHOICE.

"The interaction of annual fees, different interest rates for purchases and cash advances, interest-free periods and minimum repayments make it hard for people to understand what they are really paying. That sees many people trapped in a cycle of debt."

Veyret also echoed Mozo's support for the regulation the cards will be subject to, which BNPL services are not.

"This new card will be subject to responsible lending laws, unlike BNPL products like Afterpay that have been designed to exploit legal loopholes."

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David Thornton was a journalist at Money from September 2019 to November 2021. He previously worked at Your Money, covering market news as producer of Trading Day Live. Before that, he covered business and finance news at The Constant Investor. David holds a Masters of International Relations from the University of Melbourne.

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