In addition to providing access to instant cash when you need it most, credit cards act as a financial safety net and offer a range of benefits including free insurance and extended warranty on items purchased as well as rewards and discounts.

We’re going to delve into the wonderful world of credit cards in New Zealand and offer you our top 10 tips to help you manage your credit cards like a pro!

Whether you’ve taken out a credit card from one of the five major banks in New Zealand, are a member of a credit union or have an exclusive credit card from a leading provider like Virgin Money or American Express, managing your credit cards is critical to maintaining a healthy credit score and achieving your financial and life goals.

Fun fact: As expected, the highest spending on credit cards in New Zealand occurs during the month of December followed by November in second place. In third place is July followed by May and September.

Our top 10 tips for managing your credit cards;

1) Keep your number of credit cards low

Most credit cards have great introductory rates and offers and it may be tempting to keep add another great addition to your wallet to benefit from the rewards and 0% interest periods but remember, the fees and interest will kick in and, if you’re not using the card, you’ll be paying these fees for nothing.

2) Do not draw cash using your credit card

While being able to draw cash from an ATM when you need it may be a great credit card feature, this should be avoided at all costs. Drawing money using a credit card is expensive.

Always pay with your credit card and if you need to draw cash for whatever reason, try to use your debit card instead.

3) If you pay off credit cards in full every month, choose a card with lower annual fees

The way that you use and manage your credit cards should also dictate the type of credit cards that you apply for.

If you usually pay off your full credit card balance every month, always opt for a credit card with low annual fees and a higher interest rate. This is because the interest rate will not be charged on the balance for an extended period of time.

4) If you don’t pay off your credit card in full every month, choose a card with a lower interest rate

Choosing a card that simply has a low interest rate does not mean that it will be cheaper overall since credit cards also come with annual fees that can be quite hefty.

If you do not generally pay off your full credit card balance every month, it makes sense to choose the credit card with the lowest interest rate, even if the annual fee is higher.

5) Do not cancel multiple credit cards at once

When you abruptly cancel credit cards for whatever reason, this will appear on your credit file and will lower your credit score.

If you want to cancel credit cards, do so systematically and use a well-though out plan. This will protect your credit rating and maintain your relationship with your credit card provider.

6) Use balance transfer credit cards if your credit card debts are piling up & you can’t seem to pay them down

Balance transfer credit cards are great for those who are struggling to pay down their credit card balances and are being charged excessive rates of interest, if this sounds like your situation, consider applying for a balance transfer credit card and taking advantage of their typically lower interest rates and fair fees.

7) Get to know your credit card

Many people take out a credit card to enjoy the rewards on offer or for the introductory 0% interest periods and do not consider many of the other important features and details that they should take note of.

Always take the time to read the T’s and C’s, it may save you more money than you’d expect!

Credit card features to take note of:

  • What is the revert interest rate?
  • What is the annual fee?
  • What rewards and cash back offers will you receive?
  • What is my credit limit?
  • How much will it cost to draw cash on the credit card?
  • What is my minimum monthly payment?

8) If you do not pay your 0% interest credit card balance off in full, you will be charged interest on the balance

In order for you to keep enjoying the 0% interest period on your credit card you need to repay the full credit card balance at the end of each month.

If you are unable to do so, the revert rate will apply and be charged against the full outstanding balance. If you are having trouble paying off the balance, rather opt for a balance transfer credit card to avoid the high interest.

9) Always compare cards & rewards

With so many credit card comparison tools, it has become easier than ever to compare the variety of options on the market and choose the nest option for you.

Remember to compare not only the interest rates but the annual fees and rewards that a credit card offers too. Check the revert rate and the interest free periods carefully. Finally, make sure you’re familiar with the terms and conditions that the credit card comes with.

10) Check your credit card statements monthly

You’d be surprised at the number of people that have never reviewed their credit card statements!

You should always check your statements, ensure all charges are correct and, of course, were made by you, as well as check for spending patterns.

You may find that you’re using your card to buy groceries and are not benefiting from the rewards programme attached to you card. In such a case it would make sense to change to a card that offers cash back rewards instead.

If you find that you’re using the card to make purchases from a specific retailer, make sure that the retailer is a partner of your bank or credit card provider.