CardWatch credit card ratings update

While credit card debt continues on the rise as per the latest release of the CardWatch Card ratings, thankfully the interest rates have fallen slightly.

With 2.4 million credit cards issued currently in New Zealand, choosing the right credit card is an issue for over half the population!

Continuing to follow in the footsteps of the USA and UK, New Zealanders have managed to add an additional $350 Million to the nation's credit card bill over the last 12 months. The outstanding balance of New Zealand Credit Cards now sits at over $4.5 billion.

Those owing money on their credit cards have seen some relief over recent months. A number of cards have been released offering substantially lower interest rates than standard cards. Some standard cards are also offering 6 or 12 month ''balance transfer'' periods wherein if you transfer your credit card debt over to the new card, they will charge you as little as 5.95 per cent per annum for 6 months.

For the smart Transactor (cardholders who pay in full every month) there are still a number of card issuers offering up to 55 interest free days. If you add this earning potential (or saving if your card is attached to your mortgage) to the rewards that many cards offer these days you can actually MAKE (yes make) money by using your credit card. The total difference for the average Transactor between using our lowest rated card and the highest, is $1200 a year.

The latest CardWatch ratings reflect the changes in the cards available in the market, and also how our spending and debt patterns have changed over the last year.

CardWatch's Rating Process

CardWatch rates all major credit cards issued in New Zealand by measuring their relative benefits and costs. Even the worth or otherwise of rewards programmes attached to cards are incorporated into the rankings, as are fees, interest rates, interest free periods and the card?s currency conversion rate for overseas transactions.

CardWatch calculates ratings for two different usage patterns, one for the person who pays off their card in full each month (Transactors) and another for those who carry forward an outstanding balance (Debtors).

More than 4.2 million ‘still paying Christmas 2005 card debts’

More than 4.2 million credit card customers have still not cleared debts run up paying for last Christmas, shock research from MoneyExpert.com shows. Nearly one in eight credit card holders admits to still having debts on their cards from last Christmas as they gear up for this year’s spending spree.

Experts estimate around £11.4 billion is set to be put on plastic this festive season and MoneyExpert.com research shows the effects will be felt for a long time. The average time taken to clear credit card debts following Christmas 2005 was 2.6 months.
The good news from the independent financial comparison website’s research is that nearly half the country’s credit card holders did not put any debt on their cards from festive season spending. And another 17 per cent took a month or less to clear their balances, incurring minimal interest.

But substantial numbers were still feeling the financial effects of last Christmas well into the spring and summer of this year and it is likely it will be the same again next year, MoneyExpert.com believes. Around 1.4 million – or four per cent – took three months to clear their debts while about 355,000 only cleared their spending in September.

Sean Gardner, Chief Executive of MoneyExpert.com, said: “Christmas is a time for giving and it looks we are definitely giving our credit cards a battering over the festive season.

“It is tempting to put spending on your plastic when it comes to Christmas and the bills are mounting up. Of course everybody intends to clear the debt as soon as possible but it is evident that millions of us don’t.

“With more than four million of us still paying for last Christmas it is clear that there is a need for many of us to change our financial habits. Getting into debt is fine as long as you have the means to get out of it.”

Someone putting £1,000 on a credit card at Christmas 2005 will pay around £169 over a year in interest if their card charges an APR of 16.9 per cent. If they had transferred to a zero per cent deal no interest would be charged until the interest-free period expires. Current deals include Barclaycard, Virgin Money and Citibank offering zero per cent for a year on balance transfers.

Research shows people aged between 30 and 50 took the longest to pay off credit card debt from last Christmas – an average of 3.3 months compared with the national average of 2.6 months. The over-50s took less than two months.

Across the country people in the Midlands and Wales took 3.18 months – the longest time to clear their debts – while Scots were the quickest at 2.14 months.