Article: Credit Cards Moving to Monthly Fees

[AFF Editor]

In 2020, CommBank introduced a new credit card with a monthly fee instead of the traditional annual fee. This has now started to become a bit of a trend with Westpac, NAB and American Express now starting to introduce monthly fees as well.

Why Are Credit Cards Moving to Monthly Fees?

Some Australian banks are starting to switch from annual credit card fees to monthly fees, sometimes with a fee waiver for each month that you spend over a certain amount. Why?

www.australianfrequentflyer.com.au

Do you prefer monthly or annual credit card fees? Leave a comment or discuss this topic below.

 

[levelnine]

Great development for churners

 

[Dr Ralph]

Monthly fees would be better for churning purposes.

 

[RooFlyer]

Monthly is good for me - NAB waives them if a modest spend achieved.

 

[hsct]

Good move, I like it monthly

 

[bamboo tree]

Interesting development. Usually with these changes it is clear who wins/loses but is it less clear in this case?

In theory, card providers would benefit from:
- less cancellations by those who are put-off by having a large fee in one month;
- more transaction revenue if the fee waivers end up encouraging more spend;

Card holders benefit from:
- only paying the card fee a month in advance rather than a year in advance (including those who cancel cards / churn);
- waiver of fee if transaction thresholds are met (although could be a dubious benefit if cardholder starts spending more than they typically would to clear this threshold).

Anything else to it?

 

[eedgo]

My initial reaction was to cancel the CBA card, however as my insurance was due and I was offered monthly payments at no extra cost, I decided to pay the insurance monthly on the card that was sufficient to eliminate the monthly card fee.

 

[pauly7]

Monthly fees would be better for churning purposes.

As long as the point bonuses don’t match

 

[NM]

And one of the big differences when CBA introduced the monthly fee was the waiver of the fee for any month when you achieve a minimum spend threshold, meaning bigger spenders can end up with no fees. That is where I see the benefit for people earning points from credit card spending.

 

[Mr H]

Monthly fees would be better for churning purposes.

Yeah, but Commbank has also nerfed its sign up bonuses.

 

[levelnine]

As long as the point bonuses don’t match

That's the main danger.

But I think it is far from certain that they will move to monthly sign-up bonuses. It takes away some of the sugar rush that gets people to sign up in the first place. If you see an ad for '120K points' and then see it is actually '10K points per month for the first 12 months', a lot of people with impatience will be turned off and go look elsewhere.

The only way it's going to work is if all the banks move in unison. Which given how frequently they do on other issues, isn't completely beyond the realm of possibility.

 

[Mahoo1960]

Great development for churners

I recently moved to a CBA Smart Awards Card, $2,000 min monthly spend or pay a$19 monthly fee. Many of my larger bills such as insurance, registration etc fall close together so I often find I’m paying bills in advance or instalments to meet the minimum monthly spend. In my case I’d rather see a minimum yearly spend, in my case $24,000 (12 x $2,000) as this would be much easier to achieve without continually monitoring my monthly spend

 

[Mr H]

I recently moved to a CBA Smart Awards Card, $2,000 min monthly spend or pay a$19 monthly fee. Many of my larger bills such as insurance, registration etc fall close together so I often find I’m paying bills in advance or instalments to meet the minimum monthly spend. In my case I’d rather see a minimum yearly spend, in my case $24,000 (12 x $2,000) as this would be much easier to achieve without continually monitoring my monthly spend

Of course, but the whole point is to get you to spend more than you otherwise would - and to get fees if you don’t.

 

[levelnine]

I recently moved to a CBA Smart Awards Card, $2,000 min monthly spend or pay a$19 monthly fee. Many of my larger bills such as insurance, registration etc fall close together so I often find I’m paying bills in advance or instalments to meet the minimum monthly spend. In my case I’d rather see a minimum yearly spend, in my case $24,000 (12 x $2,000) as this would be much easier to achieve without continually monitoring my monthly spend

If you have lumpy spend, a card with an ongoing monthly spend to have the fee waived probably isn't a great choice.

 

[VPS]

I recently moved to a CBA Smart Awards Card, $2,000 min monthly spend or pay a$19 monthly fee. Many of my larger bills such as insurance, registration etc fall close together so I often find I’m paying bills in advance or instalments to meet the minimum monthly spend. In my case I’d rather see a minimum yearly spend, in my case $24,000 (12 x $2,000) as this would be much easier to achieve without continually monitoring my monthly spend

and welcome to AFF