ANZ adds back 1% to its credit card interest rates that it reduced during 'the low interest rate environment during Covid' with its standard cards now incurring a 20.95% rate

ANZ says it has raised its credit card interest rates, effective immediately.

The rate on all ANZ cards increases by 1%. These changes apply to both the purchase rate and the cash advance rate on all ANZ cards and align with other offers in the market.

This means rates will change as follows for "purchases":

- the "low rate Visa" now becomes 13.9%,

- their standard Visa variants becomes 20.95% across all premium cards.

ANZ have not changed the fees applying to these cards which range from zero for the "low rate" card, to over $150/yr for some premium cards.

ANZ's move up unwinds the -1% cut they made in March 2020 which they said was in "response to the low interest rate environment during Covid".

This change aligns them back with their main rivals who charged 20.95% through this whole period.

You can compare all credit card rates here.

It needs to be observed that "the low interest rate environment during Covid" has now been replaced by a sharp "cost of living crisis". Using credit card debt that incurs interest as a personal finance tool is not wise. In fact if you do, a bank may look at that as financial management that is "not responsible" when assessing you for a home loan or other major borrowing. They already do that for Buy-Now-Pay-Later debt.

In decades past, credit card rates moved up in response to changed in the 90 day bank bill rate. That ceased when the 90 day bank bill rate fell, and to be fair it hasn't risen in step when they started rising again.

The attractiveness of using credit cards as a way to finance consumer purchases has been falling steady over the past 10 years. Not only have Buy-Now-Pay-Later schemes eaten into this (and BNPL have managed to side-step regulation related to consumer borrowing although this is changing), but borrowers generally have fallen out of favour with using credit card debt in the first place. Only about half of all credit card debt incurs interest now, down from over 70% pre-Global Financial Crisis.

At the same time it is imposing this +1% higher cost, ANZ is "encouraging any customers experiencing financial difficulty or needing support people to get in touch with us sooner rather than later. There are a range of credit card options available based on customer needs."