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Which credit card flies you furthest?

Find the right credit card and work out whether expensive rewards schemes are worth their cost. Use our interactive database to compare cards, and try our rewards calculator to work out the net value of flight, shopping or cashback rewards.

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Your card personality

Personality makes a big difference when it comes to maximising interest free spending, avoiding interest payments and maximising card rewards.

Work out whether you're a carefree or savvy consumer personality and you can get the best credit-card deal to suit your spending patterns.

Carefree spenders

Carefree cardholders maintain a constant cycle of debt through regular overspending or episodes of binge spending. Repayment over an extended time period means interest is always being paid. Because the card is never paid off, so-called "free" rewards come at a cost.

If you don't pay off your card in full each month you're throwing away money in interest and fees. Minimum payments are designed to benefit the bank – not you. A $4000 debt on a card charging 19.95 percent could cost you $19,400 in interest and annual card fees to repay if you’re only making minimum payments. It’ll take you 60 years to pay off this debt. Interest.co.nz provides a useful calculator to show how long it takes to repay credit card debt at the minimum payment amount.

Savvy spenders

Savvy card users never spend more than they can afford and pay off the card balance in full every month. This ensures they never pay interest. Using credit cards as an alternative to eftpos, cash and cheque payments means the savvy have large numbers of transactions - but no transaction fees. They also have a relatively high monthly spend so rewards schemes may be worthwhile.

If you’re a careful spender and always pay off your bill each month, interest rates won't matter and you have a wide choice of cards and rewards programmes. Check our Rewards calculator for the rewards programme to suit your level of spending.

Not interested in reward schemes? Go for a card with no or low annual fees.

Carefree spender tips

If you're a carefree spender when it comes to credit cards, these tips could help you reduce your debt levels:

  • Switch to a low-rate card if your credit card debt is in the thousands. You may not even need to change banks. See 'Low-rate cards' (below) for more details.
  • Rewards programmes are a trap if you're in debt on your card. The higher fees and interest rates associated with a card that has a rewards programme will most likely outweigh the dollar value of any rewards.
  • Work out a budget. Locate any spare money that you currently don't think you have and put it to work paying off your card debt. (There are local budgeting services that can help you free of charge.)
  • Pay in full - partial payment means you're paying interest. You’re also likely to be charged interest on any new purchases you put on your card and on any fees owing. On top of this, some banks will even charge interest on interest when you don’t pay off your monthly balance.
  • Pay by direct debit. Clear your whole debt in full every month by direct debit and you don't have to remember a thing. Set it up with your bank.

Rewards schemes

When comparing credit card rewards schemes there are 3 things to consider:

  • the card’s annual fee
  • the rewards scheme’s fee
  • what kind of spending the card will be used for.

All rewards schemes are designed to encourage spending. So unless you spend heaps on your card – usually more than $25,000 dollars over 2 years – and fully pay off your card at the end of each month, most schemes won’t be worth it. Check our Rewards calculator to find the net value of rewards available for your level of spending.

A high rewards rate almost always means a high annual fee, plus an extra fee for being a part of the rewards scheme. Because of this, most of these schemes require spending of more than $12,000 a year to cover their annual fee much less get into positive points territory.

Become a Gold or Silver member to find out more.

Rewards calculator

Become a Gold or Silver member to calculate your net rewards value for flights, shopping vouchers and cash-back based on your annual spend.

Low-rate cards

If you have outstanding debt on a higher-interest (above 16 percent) credit card, consider transferring your balance to a lower-interest card.

Become a Gold or Silver member to find out more.

Debit cards

Debit cards have become more widely available in the past few years: most of the major banks now offer them.

Become a Gold or Silver member to find out more.

Credit card tips

Top tips and traps to watch for.

  • Avoid cash advances: Use a credit card to buy something and you'll get up to 44 or 55 days' free credit (depending on the card). But use it to withdraw money and you'll be paying interest from that same day. It's a very expensive way to get cash. If you want access to cash on the card for an overseas trip, deposit money on the card, and use another card for purchases. (Even if your card is in credit you'll probably be charged an overseas ATM fee. Check our Credit card comparison for fee details.)
  • Card payment surcharges: Consumers who pay by cash are effectively subsidising credit-card users. Stores pay a fee to the credit-card company whenever they accept a credit-card payment, but they charge the same price to all customers regardless of the payment method used.

    Businesses can now add a surcharge for those paying by credit card. But the surcharge shouldn’t be any higher than what the retailer pays to the credit-card company. And the basic price for a product should be reduced when a retailer introduces a surcharge on credit-card payments.

  • Lodging security: Make reservations for some overseas hotels, and the sum may be charged on your card immediately, even if the time you'll be using the hotel is still months away. Hire a car, and the company may ask your card issuer to reserve an amount of credit to secure their payment. This can cause embarrassment if you don't realise it's happened.

    If you're likely to have a big bill with a hotel or car hire firm and you give them your credit card details as security, ask them if they will be putting a hold on some of your credit, and if so, how much.

  • Report lost cards immediately: If you lose your card or something odd appears on your statement, contact the lost card centre immediately.

    Keeping an eye on card security is another good idea. Don't leave your card lying around at home or work. You may also like to consider a card which displays your photograph.

  • Credit creep: "Dear Mr/Mrs Smith," the letter begins. "We have arranged to automatically increase your credit limit. If you do not want us to add $500 to your credit limit it is important you let us know right away..." The temptation for many people will be to use the extra money and, if they can't pay it all back within the month, pay the bank more in interest. It's a nasty form of inertia selling by the banks.

    Our recommendation? Don't let your bank raise your limit beyond an amount you can repay without incurring interest.

  • Chip technology: Chip technology is fast becoming the global standard for card security. A microchip stores your account information in a coded format, rather than on the old magnetic strip on the back of the card. The chips make it harder for someone to fraudulently copy (“skim”) your card details, but it also takes a little longer to pay for your purchases.

  • Tap and go: “Tap and go” has reached our shores. Its attraction is the transaction speed – 2 seconds from the moment the card touches against the terminal. There’s no need for card-swiping, entering pin numbers or signing your name for payments of less than a set amount. See our Contactless credit cards article for more information.

Credit card chargebacks

Can you reverse a credit or debit card transaction? The answer is yes. Not always – but probably more often than many people realise.

You've bought something over the internet and paid by credit or debit card. Your account has been debited, but the website you ordered from has vanished and your emails are bouncing back. Of course, no goods have arrived.

Don't panic. You should be able to get your money back through a "chargeback". We explain how they work.

What is a "chargeback"?

A chargeback is where the money paid to the retailer is reversed out of their account and refunded to yours. You may also refunded any interest charged – bank policy varies on this so it pays to ask.

Some banks will allow 2 months from the date of the transaction to apply for a chargeback, others give you 30 days from the statement period closing date – check this with your bank.

When would my bank grant me a chargeback?

Your bank should refund you if your account was fraudulently or mistakenly debited.

Beyond this, banks apply a set of rules laid down by credit card companies. It's up to the investigating bank officer to determine if your claim is covered by one of these rules.

You are not protected by chargeback policy if the purchase was made via a domestic eftpos transaction and you pushed the ‘cheque’ or ‘savings’ button. All other credit or debit card purchases including contactless transactions that are made through MasterCard or Visa processing systems should be protected by chargeback policy. If you are unsure, ask at your bank.

How do I get one?

The first step in any dispute you have with a supplier is to give it the opportunity to put things right – a good retailer should do it straight away. If it doesn't, apply to your bank for a chargeback.

You will need to provide the bank with various details, including the date and amount of purchase, and a description of the goods or services ordered.

If you received an incorrect item and returned it you need to provide proof of return. Proof of shipping is not enough – you need evidence the retailer actually received the returned goods. In the case of a service, you will need to supply a copy of your letter to the retailer stating that the service was not received and requesting a refund.

Will a chargeback cost me anything?

Most banks will charge a fee between $5 and $10 – but only if your chargeback application is unsuccessful. Additional conditions may apply, so check with your bank.

I bought a Panasonic television, but was delivered a Sony. The company will not refund my money. Would I qualify for a chargeback?

Yes, there is a "not as described" rule. When goods are not as described, and the supplier refuses to cooperate, take the goods back. Then contact your bank and apply for a chargeback. The bank may require evidence of what was ordered and what was delivered, and proof it was returned or that the seller has refused to accept the return.

I paid a deposit for a lounge suite, but the business went bankrupt before it was delivered. Can I get a chargeback?

Yes, under the "non-receipt of merchandise" rule.

What if the shop's account doesn't contain enough money to cover the chargeback?

If the other conditions are met you should get your chargeback. The bank should refund you and pass the charge to the retailer's bank, which then has to try to retrieve it from the retailer.

I bought a study course that came with an unconditional 30-day money-back guarantee. I sent the goods back within 30 days but never received the refund. Is a chargeback available?

Yes, there is a "non-receipt of credit" rule. Apply to your bank, which will give the supplier 30 days to refund you under the guarantee. If it doesn't, your bank should give you a chargeback. Unfortunately, you will have to cover the cost of return postage. When you return the goods, always obtain proof of receipt, as proof of shipping alone is not usually enough.

I bought a computer from a store the other day, but have now found a better deal elsewhere. Can I reverse the purchase?

No. You can't get a chargeback simply because you have changed your mind or found a better offer elsewhere.

What if the bank refuses to give me a chargeback?

If your bank refuses to refund you and you are unhappy with the reasons given, complain to the bank. If you are unhappy with the outcome, take your complaint to the Banking Ombudsman. If your complaint is upheld, the Ombudsman can order your bank to give you a refund.

Bank card security

Tips for safe use of ATMs, cards and PINs.

ATMs

  • Always shield the keypad when putting in your PIN. As long as you’ve taken reasonable care when using the ATM, you shouldn’t be liable if your card is used fraudulently.
  • Check your money when it comes out – sometimes people haven’t received the requested amount. Also when making an ATM deposit, check the receipt has correctly recorded how much you put in.
  • Any problems using an ATM need to be taken up with your bank, even if you were using another bank’s ATM. Your bank will chase up the other bank. If your bank won’t play ball, contact the Banking Ombudsman and escalate the complaint.
  • Most ATM transactions cost about $1 at another bank’s ATM. Cash advances using your credit card cost even more. There are also charges for using the non-bank ATMs that some convenience stores now have.

Credit and debit cards

  • No-one likes that sinking feeling when you realise your credit, debit or EFTPOS card is missing. Banks generally cover any loss if you’ve taken reasonable care of your card and PIN and report its loss quickly.
  • Look after your cards like you look after your keys or wallet … or your phone. Don’t leave them unattended or in view either at home or when you’re out.
  • Don’t forget to take your card back when you’ve used it in a shop or ATM.
  • Contact your bank as soon as possible about a lost card on its dedicated phone number for reporting lost or stolen cards – take that number with you if you’re going overseas.

PINs

  • Choose a PIN that doesn’t use obvious number combinations or important dates like birthdays, anniversaries, phone numbers or addresses. You shouldn’t use the same PIN for different cards.
  • Never write down the PIN numbers for your bank cards or store them anywhere electronically – even disguised. You’ll be breaking the card issuer’s terms and conditions.
  • Don’t tell anyone your PIN – family, bank staff (especially people claiming to be bank staff) or the police! Banks will never ask you to reveal your PIN. Emails that ask you to update your PIN are scams.
  • If you think someone knows your PIN, contact your bank and arrange for a new one.

More information
Banking Ombudsman quick guides: www.bankomb.org.nz.

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