Cards with 'no annual fee' are generally awful. The loss of a guaranteed income on a product makes banks irrationally nervous. They typically over-compensate the other features (interest rate etc) until the card is uncompetitive.
Besides, it would seem to me that the market for $0 annual fee cards is quite small anyway. Most consumers, when faced with a choice between a card with a low rate and a paltry annual fee (most of the 10%-12% cards have annual fees of around $50) and a card with a $0 annual fee and a high rate will choose the low rate card. They sense a trap.
But the Bankwest Zero MasterCard is not entirely unreasonable. In fact, it's a viable alternative for consumers who pay their balance in full each month but still want a reasonable rate (just in case) and don't want reward programs or superfluous features.
The purchase rate is 15.99%, which is mid-range (don't let Bankwest's website convince you otherwise), but not over-the-top. Actually, it's the lowest rate for a $0 non-business credit card we've seen. The cash rate is the same as the purchase rate, which is quite rare, but seems to be characteristic of smaller banks and credit unions.
As an aside, the cash advance rate used to be 20.49%, prior to 31 March 2008. If you got your Zero MasterCard prior to that date, you're stuck with the higher cash rate.
There is also a honeymoon period of 4.99% for six months, which applies to both purchases and balance transfers.
So how does the card stack up against its sibling, the
Lite MasterCard? Both offer 55 days interest free, but where the Zero has a $0 annual fee and a rate of 15.99%, the Lite has a $59 annual fee and a very low rate of 9.99%.
On a $3,000 balance (approximately the average Australian credit card debt according to the RBA), you'll pay a total of $358.70 (interest and annual fee) on the Lite, but $479.70 on the Zero, despite the $0 annual fee.
The two only become comparable on a $1,000 balance, where you'll pay a total of $158.90 on the Lite and $159.90 on the Zero.
Bottom line: If you pay your balances in full each month and couldn't give two figs about the interest rate, this card is a great option. It's the cheapest $0 consumer credit card we've reviewed and offers a generous interest free period without over-compensating the rate.
It's also appropriate if you occasionally allow your balances to lapse into the next month, so long as you keep it under $1,000.
If you're the sort of person who maintains a large balance on their card, the Lite is probably a better option. Despite the $59 outlay, you'll end up paying less in the end.
