Credit cards
Credit cards are an easy way to pay for things but they can also be very expensive if you don't pay off the balance in full every month. The longer you leave an unpaid credit card balance the more expensive it gets.
Here's how to get the most out of your credit card, and pay the least amount of interest:
- Find the best interest rate
- Check the fees and interest-free days
- Follow our 8 rules for credit cards
Find the best interest rate
Credit card interest rates can range from 10% to more than 20%.
It's important that you choose a credit card that suits how much you spend and your ability to repay. For example, if you tend not to pay off your card every month, you'll probably be better off with a lower interest rate.
Check the fees and interest-free days
Most credit cards offer interest-free days on purchases and charge an annual fee. Fees can range from nothing to $450 a year, and the number of interest-free days can range from 0 to 55.
If you think you're paying more than you should, ring your bank and ask for a better deal. If your bank can't offer the best deal consider changing cards.
Follow our 8 rules for credit cards
- Shop around for the best deal
Credit cards come with varying interest rates, fees, and rewards programmes. Take the time to select the credit card that best suits your circumstances. - Know the interest rate you're paying on your credit card
Many credit cards charge around 20% interest. Do you know your card's current interest rate? - Review your credit card limit
Base your credit card limit on how much you can afford, not how much you might spend. If you think you will have trouble paying it back, decrease your limit. - Pay the balance off in full each month
You can only take advantage of interest-free days if you pay the balance in full at the end of the month. If you can't afford to pay the balance in full, at least try to pay more than the minimum repayment to save on interest costs. - Don't use your credit card to withdraw cash
Don't withdraw cash from your credit card - banks charge high fees for this. Any cash you withdraw attracts a high interest rate from day one. - Be wary of accepting a higher limit or additional card
If you let your bank raise your credit limit, or give you another credit card, you increase the risk that you'll end up paying lots of interest. Plus credit cards usually have an annual fee, so the more cards you have, the more fees you pay. - Avoid temptation
If you can't resist the temptation to spend more than you can afford, leave your card at home. That will give you time to weigh up whether your purchase is essential or just nice to have. - If you're in trouble, talk to your bank
If your credit card is getting out of control, talk to your bank about options for clearing your credit card debt. You may be able to take out a loan to pay off your credit card and pay off the loan at a lower interest rate.
User Comments Better paying
Generally it's better paying it off in full at the end of each month as banks slap on high interest rates, and therefore you're paying back what you spent and then some.
Posted at 08:12 pm on August 26, 2008 Credit Cards
Here in NZ we dont need to 'build' credit! Lenders loan on our ability to repay...ie. our income level, and our lack of a bad credit rating from not paying our bills. The fastest way to get yourself into trouble is to own a credit card. Rich people dont need or use credit cards. The need to 'prove' ourselves worthy to banks by repaying past credit, is a total lie that we have all been lead to believe. You can tell a rich person by their not having a credit card or any loans at all!
Posted at 07:50 pm on January 06, 2009 Bye bye credit card
We are transfering our credit card debt from two cards to a low interest credit card. The interest on our two cards was 22% and 23% and our new interest rate will be 8% for six months and then 14% after that. I'm thinking about getting one of those debt cards (can be used like a credit card, but just comes out of your cheque account) and just treating the new credit card as a loan to be paid off. But, it's a hard decision to make as I have had a credit card for so long. About 16 years. Has anyone else been in this position? Or any ideas or advice?
Posted at 09:04 am on January 18, 2009 RE: Bye bye credit card
It sounds like you are heading in the right direction Kat2, keep it up. If you have been paying annual fees on two credit cards plus 22% to 23% interest on outstanding balances continuously for 16 years then someone has put their children through university thanks to you :)
By paying cash via a debit card you will save on interest and avoid the debt habit. Once you have paid your credit card off use it only when necessary and pay it off entirely by the end of the month, or get rid of it all together.
If you are disciplined enough you can keep your credit card instead of the debit card and use it for all you day-to-day transactions and bill payments, and pay off the entire balance before the end of the month. This way you will never pay interest so the interest rate wont matter, and you will save money on transaction fees from your cheque account.
Good luck
Posted at 02:59 pm on January 20, 2009 Transfer of visa
Hi i am transfering my visa to another bank and need to know if it is a good idea to pay off both my visas on to one and then transfer the total. Would that work the rate i pay is 22% and after transfering it will be 4.99% for 6 months then 13.9% after that. Any advice i would appreciate a lot many thanx .
Posted at 01:38 pm on January 28, 2009 Transfering credit card debt
A bank is doing a deal till 30 April - transfer debt at 5.95 % till debt paid off. Can't go wrong surely? Anyone aware of any problems with transfer deals?
Posted at 09:10 pm on April 28, 2009 
Credit Card
I need to know...I have heard mixed answers. Is is better to pay off a credit card monthly payment in full or pay most of it and pay the rest the next month? Although,there's interest, which is better to BUILD credit??