Are you wasting money on your credit card?
Centrix data shows 2.36 million active consumer credit cards in this country - but if you own one of them, there are a few ways you might be losing out.
Here are some expert tips on managing your card and getting the most out of it.
Use a low-rate card or transfer your balance, if you have credit card debt
There's no point having a credit card that offers lots of rewards and perks, if it means you face a higher interest bill each month.
Reserve Bank data shows the average interest rate being paid by people with credit card debt is just under 20%. About $6 billion is owed on credit cards.
If your balance is $5000, that means about $80 a month in interest.
With a typical rewards card, you might have earned rewards of about $30 accumulating that balance, but a number of no-rewards credit cards offer lower interest rates.
ASB's Visa Flex has a 9.95% rate, and Kiwibank's Zero Visa or Westpac's Fee-Free Mastercard offer 12.9%. At 9.95%, that $5000 balance would cost $40 a month.
Those cards also do not have annual fees, which can be $40-90 on standard rewards cards.
In some cases, you can transfer the balance of your credit card to a card with a different provider for a lower interest rate or even an interest-free period. ASB currently offers 0% for six months on a transferred balance.
Pay more than the minimum
Credit card providers will tell you that you have to make a minimum payment each month, which is usually a set percentage - maybe 2-3% of the balance or a minimum dollar amount - but if you stick to that, you'll pay a lot of interest.
Moneyhub has the example of someone with a $1000 credit card bill and a minimum 2% payment.
If they paid $20 on the day that the bill was due and were charged 20% interest, their next bill would be $996. Moneyhub calculated that this payment structure would take 16 years and an extra $2000 in interest to repay the initial amount owing.
Clear your balance every month whenever you can. Your interest-free period for your purchases only applies when you do this.
Make the most of rewards schemes
If you are paying for a card with a rewards scheme, it makes sense to make the most of it.
Consumer NZ advises that you generally need to spend at least $12,500 a year on your card and fully pay it off each time to make the higher annual fees worth it.
If you do spend at that level, you have options.
Some have a large range of perks, such as Westpac's Hotpoints World Mastercard, which has a 16.5% interest rate, access to airport lounges, 120 days of overseas travel insurance and a faster rate of rewards. It costs $285 a year, though, unless you charge $50,000 to it in six months.
BNZ's Advantage Visa Platinum has a $90 annual account fee, and includes 90 days of international travel and a concierge service.
Rewards, cashback or flights?
Picking a rewards scheme that offers the sorts of perks you want also can help maximise value.
ANZ offers cashback. BNZ offers points that can be turned into cashback.
Other schemes offer points - ASB's True Rewards can be redeemed for vouchers or merchandise, or switched to Everyday Rewards that can be used for groceries or fuel.
Westpac's Hotpoints can be used for vouchers or merchandise, or used to pay for purchases on a card.
Sharesies recently launched an 'Investback' debit Mastercard, where you get 1% of your spending invested. Its annual fee is $12 for people on a Sharesies plan and $25 otherwise.
ANZ, American Express and Westpac also offer Airpoints.
In general, the earn rates for the rewards are similar.
ANZ's cashback is earned a rate of $1 for every $120 spent on its platinum card and $150 on its standard Visa. ASB's True Rewards accumulate at a rate of one per $150 on its standard card and one per $100 on its platinum card.
Westpac's Airpoints are offered at one for every $150 on the standard card up to $3500, one per $110 on the platinum card and one per $95 on the priciest World Mastercard.
Consumer calculated that, if you are particularly interested in flights rewards and spend about $20,000 a year, an American Express Airpoints card would get you there fastest, followed by an ASB Visa Platinum Rewards card.
If you spend $50,000 a year, American Express Airpoints Platinum would be your best bet, followed by the ASB Visa Platinum, which would earn about $840 over two years for flights.
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Watch out for cash advances
Taking cash out of your credit card can be expensive.
Sometimes a fee is charged, but you will also be charged interest immediately and it might be at a higher rate.
Not only ATM withdrawals count here. Sometimes buying Lotto tickets, even topping up your My Lotto account online, might qualify as a cash advance.
Some tax payments are also treated this way.
Seek help if you're maxed out
North Harbour Budgeting Services financial mentor David Verry said he had seen BNPL being used by people who had maxed out their credit cards and needed another way to finance their purchases.
"No interest, of course - but default fees - so generally BNPL is the debt that is the first to not be paid and, when used for necessities, it doesn't take long for things to spiral out of control. Multiple weekly repayments, which are more than the weekly spend on things might have been and they're locked into continuing to use them."
Financial mentors may be able to offer guidance on how to get credit card debt under control.
Debit cards - which take money from your account, rather than offering it as a loan - can be an option, if you do not have good credit or a reliable income, but Consumer said there was no benefit switching to debit for anyone who was able to clear their credit card balance each month.
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