Rewards and travel credit cards typically come with higher interest rates and fees compared to standard credit cards, as these cards tend to offer more features, protections and rewards in the form of frequent flyer programs.
However, consumer advocate CHOICE has called for the interest rates on these cards to be lowered in the wake of COVID-19.
“While the banks’ response to customers affected by COVID-19 has been commendable to date, more work needs to be done to make credit cards fairer, especially frequent flyer cards,” CHOICE banking expert Patrick Veyret said.
Virgin Velocity credit cards in particular were named and shamed by CHOICE.
With most flights grounded and Virgin Australia itself going into voluntary administration, Virgin Velocity has placed significant restrictions on points redemption.
According to Mr Veyret, the Velocity program being essentially frozen means the value of these points and cards remains in limbo.
"It’s simply indefensible that banks continue to charge people interest rates in excess of 20% on Velocity frequent flyer cards," he said.
"While the value of the Virgin program is in jeopardy, the interest rates on these credit cards must be capped at 10%."
CHOICE lists many Virgin Velocity-linked credit cards that are not currently available for new customers, but are still available for existing customers, that charge interest rates near or in excess of 20% p.a.
These cards, seen in the infographic above, also come with high annual fees.
"There has been no relief for existing Virgin velocity credit card cardholders,” Mr Veyret said.
“Banks market their rewards programs to lure people into purchasing expensive credit cards, often using the trap of 0% balance transfers. Banks justify their exorbitant interest rates and fees by pointing to perks like access to frequent flyer programs.
"However, a recent CHOICE investigation found that many frequent flyer credit cards are simply not worth it. This is even more so now with the future of the Virgin Velocity program under question."
CHOICE's invesigation is supported by previous research.
According to a 2018 study released by the Reserve Bank of Australia (RBA), 30% of customers actually make a net loss on their credit card, and inappropriate rewards schemes are a major factor in this.
The current financial climate has resulted in CHOICE's decision to call for a 10% p.a cap on credit card interest rates.
“Velocity frequent flyer credit cards are simply the tip of the iceberg," Mr Veyret said.
"The cash rate is at an historic low of 0.25%. There is no justification for the big banks to continue charging interest rates in excess of 20%.
"Interest rates on all credit cards must be capped at 10%."
Need somewhere to store cash and earn interest? The table below features introductory savings accounts with some of the highest interest rates on the market.
Provider | |||||||||||||
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4 | 0 | 0 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | ||||||
FEATURED | Savings Account
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Disclosure | |||||||||||||
Savings Account
Disclosure
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4 | 0 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
FEATURED | Savings Accelerator
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Disclosure | |||||||||||||
Savings Accelerator
Disclosure
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0 | 200 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
FEATURED | Online Savings - Premium Saver
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Disclosure | |||||||||||||
Online Savings - Premium Saver
Disclosure
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0 | 1000 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
Savings Maximiser
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Disclosure | |||||||||||||
Savings Maximiser
Disclosure
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0 | 2000 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
HomeME Savings Account (<$100k) | |||||||||||||
0 | 200 | 1 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
Growth Saver | |||||||||||||
0 | 1000 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | ||||||||
Virgin Money Boost Saver | |||||||||||||
0 | 100 | 1 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
Bonus Saver Account | |||||||||||||
0 | 100 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
Bonus Saver | |||||||||||||
0 | 10 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
mySaver | |||||||||||||
0 | 0 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
Simple Saver | |||||||||||||
4 | 0 | 0 | 1 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | ||||||
Netsave Account | |||||||||||||
3 | 0 | 0 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | ||||||
Online Savings Account | |||||||||||||
3 | 0 | 0 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | ||||||
HSBC Everyday Savings Account | |||||||||||||
0 | 50 | 1 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
Incentive Saver Account | |||||||||||||
4 | 0 | 0 | 0.01 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | ||||||
Bankwest Easy Saver | |||||||||||||
0 | 50 | 2 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
Bonus Saver | |||||||||||||
0 | 0 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
FEATURED | Save Account
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Disclosure | |||||||||||||
Save Account
Disclosure
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0 | 50 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
Incentive Saver Account | |||||||||||||
0 | 200 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
Growth Saver Account |
- Increase your balance by $200 each month to earn the maximum interest
- No account keeping fees
- No minimum balance
- Interest paid monthly
More to come...