National Australia Bank (NAB) has quietly changed its policy of giving a pro-rata refund of the annual fee to customers who cancel their credit card within the first year.

Until last month, NAB customers who cancelled their credit card after paying the annual fee could receive a pro-rata refund of the fee paid. This would be calculated based on the number of months still outstanding until the next annual fee was due.

Australian Frequent Flyer understands that NAB may still offer a pro-rata annual fee refund to customers who cancel their credit card after keeping it open for more than a year. The NAB StraightUp credit card is also excluded from this change.

This policy was not widely advertised. But it was a nice benefit for NAB customers when cancelling credit cards just a few months after opening them. While they wouldn’t get the full annual fee back, these customers would receive a fee credit for the unused months. This refund could be sent to either another NAB account or an external bank account.

Why would NAB make this change?

It’s not difficult to see why NAB may have stopped giving pro-rata annual fee refunds to customers who’ve held a credit card for less than a year. Some people may simply decide that they no longer want the card, or that it’s not for them. But others would be credit card churners who’ve earned a large amount of frequent flyer points – which the bank has to pay for.

Many of NAB’s credit cards currently come with a reduced annual fee in the first year. Even so, if NAB has awarded a customer a large amount of bonus points, it could be quite unprofitable for them to also refund a large portion of that annual fee.

In order to encourage new customers to keep their credit cards open for more than 12 months, most the current sign-up bonus point offers on NAB’s Premium and Signature cards also offer extra bonus points to customers who renew their card for a second year.

What about other banks?

Most other Australian banks do not offer pro-rata refunds of credit card annual fees to customers who close their accounts mid-way through the year.

Join the discussion on the Australian Frequent Flyer forum: NAB Signature prorated annual fee refund

Matt Graham

The editor of Australian Frequent Flyer, Matt's passion for travel has taken him to over 90 countries… with the help of frequent flyer points, of course!
Matt's favourite destinations (so far) are Germany, Brazil & Kazakhstan. His interests include aviation, economics & foreign languages, and he has a soft spot for good food and red wine.

You can connect with Matt by posting on the Australian Frequent Flyer community forum and tagging @AFF Editor.