Here are some explanations as to how we calculated the figures in our advertising.

## The heels

If you purchase a pair of shoes for $280 using your credit card and you only ever pay the minimum monthly repayment, they will end up costing you $351. And they will take three years and one month to pay off.

This calculation is based on:

1) The monthly minimum repayment being 3% of the balance due or $10, whichever is greater. Different cards calculate the minimum repayment differently – it may be as little as 2% of the overall balance, or up to 5% of the overall balance.

2) An interest-free period of 55 days from the date of purchase, then an annual interest rate of 17.7% charged on the remaining balance each month (17.7% is the ‘weighted average’ from Reserve Bank data – meaning that if you took all the credit cards that New Zealanders are paying interest on, that would be the average interest rate.)

**Tip:** Make your credit card work to your advantage: always pay it in full each month.

3) The shoes being the only purchase made with the credit card. So the credit card balance was at zero when the shoes were first bought, and no more purchases were made after the shoes were purchased.

This calculation excludes any annual fees or other fees associated with the card.

## The speakers

If you purchase a pair of speakers for $999 using your credit card and you only ever pay the minimum monthly repayment, they will end up costing you $1,719. And they will take nine years and eight months to pay off.

This calculation is based on:

1) The monthly minimum repayment being 3% of the balance due or $10, whichever is the greater. Different cards calculate the minimum repayment differently – it may be as little as 2% of the overall balance, or up to 5% of the overall balance.

**Tip:** Base your credit card limit on how much you can afford, not how much you might spend.

2) An interest-free period of 55 days from the date of purchase, then an annual interest rate of 17.7% charged on the remaining balance each month (17.7% is the ‘weighted average’ from Reserve Bank data – meaning that if you took all the credit cards that New Zealanders are paying interest on, that would be the average interest rate.)

3) The speakers being the only purchase made with the credit card. So the credit card balance was at zero when the speakers were first bought, and no more purchases were made after the speakers were purchased.

This calculation excludes any annual fees or other fees associated with the card.

## The credit cards

If you owe $2,500 on your credit card and you only ever pay the minimum monthly repayment, you will end up paying $4,724. And it will take you 14 years and 10 months to pay off.

This calculation is based on:

1) The monthly minimum repayment being 3% of the balance due or $10, whichever is the greater. Different cards calculate the minimum repayment differently – it can vary from 2% to 5% of the overall balance.

2) An annual interest rate of 17.7% charged on the remaining balance each month (17.7% is the ‘weighted average’ from Reserve Bank data – meaning that if you took all the credit cards that New Zealanders are paying interest on, that would be the average interest rate.)

3) No further purchases being made with the credit card

This calculation excludes any annual fees or other fees associated with the card.

## The two cars

If you purchase a car worth $10,995 on finance for a three-year period at 13% interest, you will end up paying $13,602 for the car. Your monthly repayments will be $357.

This calculation is based on:

**Tip:** Car loans vary significantly from lender to lender. Look for the best interest rate and lowest fees. Find out more: Car loan guide.

1) An unsecured loan

2) Start-up fees of $350

3) An annual interest rate of 13%

4) No interest-free period

5) No deferred payment period

6) A deposit of $750 – so the actual money borrowed was $10,245.

This calculation excludes any other fees associated with the loan.

## The slider

The slider shows how different payments can affect the amount of interest you pay for an item – from paying the minimum amount each month, paying a set amount each month ($75, $150, $400), to paying the credit card in full.

This calculation is based on:

1) The minimum repayment being 3% of the balance due or $10, whichever is the greater

2) An annual interest rate of 17.7% charged on the remaining balance each month (17.7% is the ‘weighted average’ from Reserve Bank data – meaning that if you took all the credit cards that New Zealanders are paying interest on, that would be the average interest rate.)

3) No further purchases being made with the credit card

This calculation excludes any annual fees or other fees associated with the card.