Dreaming of cheaper credit

Ever since I started reading personal finance blogs, I’ve come to realise that credit is never going to be as cheap in New Zealand as it is elsewhere. (As with food, cars, clothes, technology and pretty much anything else you can think of.)

Default credit card interest rates hover around 20%. You might see balance transfer offers around 5%. Car and personal loans around 10%.

You bloggers in the States, though (and that’s most of you)? I hear tales of 0% loans. 0% balance transfer rates. Cards without annual fees. Plus of course, you have access to so many more kinds of cards, and it’s easy to compare credit cards online.

Interest rates don’t overly fuss me, because I’m not in debt. What would be nice, though, is if there were local cards without annual fees.

I currently have one plain old Visa, and it’s with the bank I’ve banked with all my life. Luckily, it’s a pretty awesome bank with accounts that suit my needs and the single best online banking system available, IMO. It’s ridiculously easy to make instant payments onto it (because I like to pay off purchases right after making them) and the six-monthly fee of $12 is one of the lowest out there.

Recently I was tempted by Air NZ offering no joining fee on its Airpoints programme. (You know travel is number one on my list.) I could sign up for a credit card linked to Airpoints, and earn points on everyday spending.

Thing is, the fee is more than double what I currently pay – $25 every six months. And based on our annual spending, we would be lucky to rack up enough points in a year for a single domestic flight.

Maybe it’s worth it for frequent flyers, who also earn points when they book flights, but for those who are trying to save for travel, it doesn’t sound like such a hot deal.

Tell me, how many credit cards do you have? Anyone out there an Airpoints member?

15 thoughts on “Dreaming of cheaper credit

  • Reply Little Miss Moneybags January 27, 2012 at 16:51

    I don’t know if it helps – but I’ve heard of these mystical 0% loans and 0% balance transfers, but I’ve never actually seen one in the wild, so to speak. I don’t know anyone who has one. Our credit card does have no annual fee, but it was tied to our checking and savings account and it’s a fancy rewards card that has, to date, gotten me about $100 in Target gift cards, despite the multiple thousands of dollars we put on it every month. So I think it’s mainly a case of the unusual and rare being reported as if they are super common.

  • Reply tinysarah January 27, 2012 at 17:03

    Hey E – Canada sounds fairly similar to NZ. Most default credit card rates hover around 19.99% (but can go upwards of 25%). 10% also sounds about right for personal loans/financing.

    Personally, I have three credit cards; two Mastercards, and one AMEX. One Mastercard earns grocery points at my local retailer, and the other has a low interest rate (9%), and often offers balance transfer at 1.99%. I keep it around, for a “just in case unexpected big purchased”. The AMEX is strictly for travel, as I found it so much easier to use in Europe and Asia.

  • Reply sense January 27, 2012 at 18:48

    Yeah, I couldn’t believe it when I moved here–paying for a basic, no rewards credit card?! No way. I was used to getting rewards cards for free (5% cashback was my favorite one).

    The airpoints terms and conditions were too confusing to me, and the fees looked like they were astronomical compared to the rewards. I was tempted but it all ended up in recycling in the end.

    What you describe is very common in the US, from my experience. The US really is the land of the free credit card. They only charge for cards that give amazing rewards, and even then, you usually get the first year’s fees waived, so you can grab all the bonuses and then cancel if you don’t want to pay the fee after a year.

    When I lived in the States I got 0% interest offers every month (continue to do so, even though I don’t even live there anymore!!), and I have NEVER paid for ‘the privilege’ of credit, ever. Don’t plan to, either. 🙂 I’m keeping my US cc’s and signup bonuses–I’ll get a free return flight to the East Coast of the US this year and $500 USD in gift cards, just for spending normally. Thanks, US credit cards!!

  • Reply sense January 27, 2012 at 18:55

    I have two regular cc’s that I keep open for my credit score (Chase Freedom and Capital One Hassle-Free Rewards). They both give at least 1% cashback. Capital One is my go-to; it doesn’t charge foreign exchange fees for using it in NZ and it offers me free insurance on things like travel and car rentals.

    I have 3 other cc’s that I just signed up for for the bonuses (first year annual fee waived): Citibank Thank You ($500 in gift cards), Chase Sapphire (75000 Airmiles), and Chase United Milage Plus (50,000 airmiles). It usually takes ~75,000 airmiles to get a free return flight to the US. I’ll redeem their points and cancel them before a year is up, I’ve got the dates and reminders all set up for myself. 🙂

    Oh and none of these charge a fee, although I’m sure that will change sometime. God Bless America.

  • Reply cantaloupe January 27, 2012 at 20:42

    Do you use your credit card for everything? Like seriously, everything. When I was doing that, I racked up rewards like whoa.

    • Reply eemusings January 28, 2012 at 09:30

      Yes, but at $1 per $145 spent and around $1000 spent in an average month, that doesn’t add up to a whole lot (if only rent could be paid on a CC!)

  • Reply Earn Save Live January 28, 2012 at 00:25

    Last year, I moved from the U.S. to Australia and managed to accrue credit card debt in both countries. The interest rates are SO MUCH higher here! And the rewards offered on credit cards and free in-store programs are so much less.

    Right now, we’re snowballing $25,000 of credit card debt. We plan to keep our cards in both countries, but use our U.S. ones for travel or other major purchases since we get more rewards, especially through Chase.

  • Reply addvodka January 28, 2012 at 03:04

    To confirm, Canada is definitely similar to NZ. We usually have anywhere from 19 – 21% interest, and if you want enough credit, you’ll have to pay an annual fee. I don’t because I have a mediocre card. I get a rebate of 1% of everything I spend, though, so it’s awesome.

  • Reply SP January 28, 2012 at 03:52

    Credit cards typically have very high interest rates in the US too (20%-ish) and 0% balance transfers are largey a thing of the past and typically had fees associated with them.

    But most basic credit cards have no fees. A lot of the airline miles cards do have annual fees of about $75-$100, and to get a card with no foreign transaction fee (i looked last summer) there was also no fee-free cards.

    Car loans for people with good credit can be quite low these days from the dealerships, but I’m not sure what the rates are on personal loans and bank car loans.

  • Reply Lisa Clark January 28, 2012 at 08:14

    I have no credit cards but instead have a debit card which I feel is just as good. Even though it is a “Visa” debit card it doesn’t work overseas other than in ATM’s.
    The UK has lots of offers of 0% interest for transfer balances, which I used while getting out of debt. Credit cards mostly have no annual fee and interest rates vary Halifax charge 12.9%, HSBC 16.9% and Santander charge 22.8% and 17.9%.
    For the last few years banks over here have been offering current accounts with a monthly fee, that include free travel insurance, AA Breakdown Cover, Mobile phone cover, ID Theft Assistance, etc. The fees are from £5 to £12 a month – I have turned the chance to snap up one of these accounts several times over the last few years. What part of “no” don’t they understand? 🙂

  • Reply simpleislandliving January 28, 2012 at 08:40

    We have an Amazon credit card that we use for travel. We can also redeem it for cash, or for gift crds to Amazon if we wanted. We just generally save the points for traveling, and everything that possibly can go on it, does. Including my son’s preschool tuition, which is great! (not great as in cheap, but great as in at-least-we’re-getting-money-back-great.) I know people who used their credit card for college tuition (!!!) and accrued enough miles so that they never paid for airplane tickets to school.

  • Reply Tracey January 28, 2012 at 14:49

    I think it comes down to population, and therefore competition. With only 4 million people in the country, there just isn’t enough business for the banks to make american-style offers profitable. I looked into getting an ASB true rewards card, but with a maximum $10,000 spend per year, that’s only $46 back after the annual fee. And when you add in the fact that many retailers pass the 2% credit card fee onto the customer, it just isn’t worth it.

    • Reply eemusings January 28, 2012 at 15:57

      This makes me wonder, actually. Say you buy travel insurance, or a concert ticket, online. You have no choice but to use a CC as that is the only payment option. But you have a Visa debit. Are you still charged the CC fee?

      I have an ASB Visa with True Rewards. With regular spending going on the card, as well as one offs for travel, clothing, concerts, insurance, car repairs, etc, it might all add up to $15-20k in a year – still not all that much in rewards perhaps, but better than nothing for money you need to spend anyway. There are so many things you need a CC to pay for, and so I may as well get one with rewards attached.

  • Reply Things I don’t (and won’t) pay for | Musings of an Abstract Aucklander February 9, 2012 at 22:36

    […] cash though, and unfortunately isn’t as nutty as I am about only sticking to own-bank ATMs). Credit card fees are a given, but more than paid for through the rebates I earn just for using […]

  • Reply Sumit May 20, 2013 at 14:03

    I really hate annual fees. I’ve never had a card that had an annual fee in the US and I’m shocked to see every card except one or two has an annual fee here. Even the cards without fees only wave them if you make at least one purchase every six months! I mean, I always payed off my cards in full, but if I decide not to use it for a while, I shouldn’t get a damn inactivity fee! That’s just dumb.

    American banks offer VISA debit cards on their free checking accounts too, where as here it’s like an extra $10 a year. I refuse to pay an extra fee just to get to my own money, no matter how small it is.

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