Credit Card Annual Fee Waived - Retention Incentives Dead?

LJasonn on 24/04/2019 - 09:18
Last edited 24/04/2019 - 09:45 by 1 other user

ARE CREDIT CARD RETENTION INCENTIVES NOW DEAD???

I have heard of many instances where a bank would waive, reduce or credit the annual fee attached to a credit card in order to retain a customer who has indicated that they are considering cancelling the card.

However apparent recent federal government reforms to the National Consumer Credit Protection Act 2009 (Cth) have meant that banks can not offer annual fee waivers/reductions or other incentives to retain a customer who has indicated that they wish to cancel the card.

Source: https://www.australianfrequentflyer.com.au/credit-card-reten…

Has anyone had recent experience with requesting a annual fee waiver/discount this year (2019)? Has it worked?

Alternatively, has anyone tried different approaches/strategies in light of this? Which bank was it and what were you successful?

Cheers,
J

For context, the cards I hold are Westpac and AMEX.

Financial

Comments

  • endotherm on 24/04/2019 - 09:35

    You could ask right off the bat if they are willing to provide some sort of incentive to reward (perhaps even retain) an existing customer. Just don't make it known that you WISH TO CANCEL the card. That might be enough to get around their obligation not to chase you with credit after you have expressed a desire to terminate your credit agreement. I think you need to convey your displeasure of not being offered any incentive program over the life of your contract, and let them read between the lines. Just as long as you don't step over the line and talk about canceling or going elsewhere.

    • Jasonn on 24/04/2019 - 10:10
      +1

      I might try that with Westpac later and report back - hopefully they understand what I am hinting at.

      • HardQuiz on 24/04/2019 - 10:17
        +1

        Report back please. Thanks.

  • kingsville on 24/04/2019 - 09:42
    +1

    Earlier this year I was thinking about cancelling my ANZ card, then their retention team offered me a Balance Transfer at 0% for 12 months.

    Not all retention incentives are dead!

    • macrocephalic on 24/04/2019 - 10:03
      +4

      True, but balance transfers are only good if you have outstanding debt (somewhere). If you pay off your credit card each month then there's no benefit on that account. If you have other debt (mortgage etc) then you can use the foregone credit card payment to pay down your mortgage further, but I've always been reluctant to start a new line of credit - which has to be maintained (payment schedules etc) - just to save a "few dollars" on my mortgage.

      • SnoozeAndLose on 24/04/2019 - 10:05

        $10,000 4% is not few dollar for 12 months

        • macrocephalic on 24/04/2019 - 12:07

          It's $400, assuming that you can hold the full $10k for 12 months, however, [AFAIK] most require you to pay it back - even if you're not getting charged interest. That means that the benefit is $200 over 12 months. Mortgages are more like 3.5% now, so $175. If you miss payments then you may get penalties.

          That's why I put "few dollars" in quotes. Yes it is more than a few dollars, but the time and effort to do it, plus the risk of coping penalties make it more effort than it's worth for me. The same reason that I don't sign up to every rewards credit card which is posted up here.

          YMMV.

          • SnoozeAndLose on 24/04/2019 - 12:57

            @macrocephalic: what does pay it back means?
            0% with no upfront fee means you can keep $10,000 for 12 months.

            • macrocephalic on 24/04/2019 - 13:19

              @SnoozeAndLose: It depends on the loan. Many loans will require you to pay back the capital each period, even though you are not getting charged interest on it. e.g.: if you have a 12k loan, for 12 months and 0% interest, then you still have to pay $1k per month back. This is something commonly overlooked when people get interest free loans.

              I'm not sure about the personal loans that your bank offered you.

              • SnoozeAndLose on 24/04/2019 - 13:41

                @macrocephalic: if you are talking about the bank loan not about the credit card interest here.

                For P&I loan yes you need to pay for the loan, if you are talk about loan of $300,000 then principal and interest for 25 years loan will be $1,583 with 4% interest per month.which in the early stage of the mortage the principal reduction is so small, so the calculation that you have is incorrect.

                • macrocephalic on 24/04/2019 - 16:12

                  @SnoozeAndLose: I'm not sure where you got this $300k and 4% bit from.

                  Yes, I am talking about a P&I loan. When your credit card company offers you an "interest free loan" for the amount of your current credit card debt, they are generally (IME) trying to switch you over to a P&I (0% interest) personal loan. This loan will have regular principal repayments - even if there is no interest charged.

                  You can simply calculate the benefit by taking the initial principle, multiplying it by the interest rate (PA) and the number of years, and halving it. This doesn't factor in compounding, but for these small accounts it's a close enough approximation.

                  i.e.: The interest on a loan of $12k for one year, with a rate of 4% is (12000x0.04x1)=$480. If you halve that then it's $240.
                  If you have the same $12k loan and pay it back at even increments ($1000/month) in one year then you will have paid ~$200 in interest.

      • Jasonn on 24/04/2019 - 10:35

        Have your tried any other approach (success/failure)?

      • kingsville on 26/04/2019 - 17:06

        I find it worth the effort.
        (1) If your other credit card goes into surplus, it only costs $2.50 to withdraw these surplus funds.
        (2) I don't miss the minimum monthly repayments
        (3) It generates worth $1200 of ING interest

  • justhooked on 24/04/2019 - 10:43
    +1

    Don’t tell them you want to cancel if you say cancel they have to follow the new law or they will be liable.

    Best you can do now is say you are a loyal customer that wants a better deal what can you offer me if they say what are you looking for say fee free for life or a period of time . As you are asking for a deal/ promo they may try and retain you.

    • Jasonn on 24/04/2019 - 11:11

      You're right. That's probably the best approach.

      Have you had any recent successes with this?

      • justhooked on 24/04/2019 - 11:36
        +1

        Not personally But a friend got a fee reduction on his anz card using this tactic

        Let us know how you go

      • Poolprouk on 24/04/2019 - 11:40
        +1

        I did with my qantas premier card, I just rang and mentioned that my annual fee was due and were there any retention offers.

        You just need to ask.

        Got 50% off. (this was late Jan)

        • macrocephalic on 24/04/2019 - 12:08

          Maybe I should have tried this with the ANZ black card. I just went and cancelled it before the fee was due.

          • Jasonn on 24/04/2019 - 13:40

            @macrocephalic: When did ANZ charge you the annual fee? I think Westpac charges it at the end of the first statement period.

  • jas121212 on 24/04/2019 - 14:27
    +2

    Tried and confirmed with Westpac Amex.

    They will initially provide you the same information the OP noted - no incentives are to be provided for a consumer to retain a credit card.

    HOWEVER….

    Upon agreeing to cancel the card (after the T&Cs), I was offered a 30k points incentive to stay - reason being, I have already made my decision to leave and they are trying to bring me back.

    Seems like a loop they're latching onto.

    Hope that helps!

    • macrocephalic on 24/04/2019 - 16:15

      That sounds like a hell of a loophole! What is the difference between convincing someone to stay and convincing them not to leave?

      If they let you cancel and then offered you 30k points to join again, putting through the paperwork for both, then the loophole would be more defined.

  • 0 jingle 0 on 25/04/2019 - 21:39
    +1

    Royal Commission improving things for us all !

    Funny how every time we’re told things are being improved for the consumer / average person we are worse off.

    • bobwokeup on 26/04/2019 - 12:23
      +1

      Totally agree, these reforms only help uneducated people who don't know how to manage their finances.

      The only change I like is being able to reduce your credit limit (have been told by some banks they can't reduce the limit) and cancel the account online.

      • pandadude on 01/06/2019 - 23:21

        Agreed. I also got told you can't change products too. I sure if this is a really good idea.

  • DogGunn on 01/06/2019 - 23:23

    I called up to cancel a Coles CC (Citibank) as I didn't want to pay the annual fee this year. They offered to waive the fee, and they did.

    EDIT: Reading the legislation, I can see where they have the issue.

    133BV Credit provider not to suggest the consumer not terminate the credit card contract

    When this section applies

            (1)  This section applies if:

                (a)  a consumer who is the debtor under a credit card contract has a credit card termination entitlement under the contract; and

                (b)  the consumer has requested to terminate the credit card contract.

    Requirement

           (2)  The licensee who is the credit provider under the credit card contract must not suggest that the consumer remain in the credit card contract.

    Civil penalty: 5,000 penalty units.

    Offence

    (3) A person commits an offence if:

                    (a)  the person is subject to a requirement under subsection (2); and

                (b)  the person engages in conduct; and

                (c)  the conduct contravenes the requirement.

    Criminal penalty: 50 penalty units.

    It would probably be worthwhile stating then that you would like them to waive the fee or otherwise make an offer otherwise you will request to cancel the card.

Login or Join to leave a comment
Login Join