Credit cards

Find the best interest rate

Credit card interest rates can range from 12% to more than 20%. Cards with low interest rates usually charge higher annual fees.

Can’t seem to get that balance down to zero? It can be worth looking into balance transfers. These are special offers to transfer a balance from a current card to a new one with a different lender – but at a much lower interest rate.

When taking up a balance transfer offer to pay off credit card debt, it’s best to cut up and cancel the old card to avoid running it up again. Also, check the details of the offer, as any new purchases might be at a different interest rate.

If you don’t usually pay off your card every month, it’s worth choosing the card with the lowest interest rate.

Check the fees and interest-free days

Most credit cards offer interest-free days and charge an annual fee. Fees can be up to several hundred dollars a year and the number of interest-free days can range from 0 to 180.

Sometimes it may seem like you’re paying more than you should, in which case, call the bank and ask for a better deal. If they can’t come up with a better offer, consider changing cards.

For more information about current interest rates, interest-free days and fees visit the interest.co.nz website.

Pay your credit card balance in full every month to avoid interest charges

Top tips for managing credit cards

Shop around for the best deal: credit cards come with a range of interest rates, fees, and rewards programmes.
Know the interest rate: many credit cards charge around 20% interest.
Review the card limit: this should be based on what you can afford (not how much you might spend!). Asking for a lower limit is an empowering move!
Pay it off each month: you can only take advantage of interest-free days if you pay the balance in full at the end of each month. If that’s not manageable, try to pay more than the minimum repayment to save on interest costs.
Avoid taking out cash on your credit card: banks charge high fees for withdrawing cash on a credit card. Any cash withdrawn also attracts a high interest rate from day one.
Stick to one credit card: be wary of accepting a higher limit or another card. If you let the bank raise your credit limit, or give you another credit card, you might end up paying lots of interest. Plus credit cards usually have an annual fee, so more cards mean more fees.
Leave the card at home: if you find that you can’t help spending more than you can afford, it’s best to leave the card at home. Take time to weigh up whether a purchase is essential or just nice to have.
Talk to the bank: credit card getting out of hand? Ask the bank about what options there might be, such as taking out a lower-interest loan to pay off credit card debt.

Credit card FAQs

Do I need to keep a credit card balance in order to build my credit score in New Zealand?

No – that's a myth! You don't need to carry debt or pay interest to build your credit score. What matters is showing you can manage credit responsibly. Paying bills on time (including power and phone), making regular repayments when you do borrow, and avoiding defaults all help build your score. Paying your credit card off in full each month actually shows better management than carrying a balance and paying interest unnecessarily.

Are credit cards bad for me financially?

It depends how you use them. They're convenient and can help build your credit score if managed well. The trouble starts when you don't pay the full balance each month – that's when high interest rates (around 20%) kick in and debt can spiral quickly. If you struggle with overspending or can't pay off the balance monthly, credit cards can become expensive and drag you into debt. In that case, a debit card might be better for you.

What happens if I only make the minimum repayments on my credit card?

Paying just the minimum means you'll pay the maximum in interest! Minimum payments are typically around 2–5% of your balance, which barely covers the interest. A $5000 balance at 20% interest could take over 30 years to pay off with minimum payments, costing thousands extra in interest. Your debt shrinks painfully slowly.

Should I use a credit card or debit card? What’s the difference?

Credit cards let you borrow money up to a limit and pay it back later. You're charged interest if you don't pay the full balance each month. They help build credit history but require discipline. Debit cards spend your own money directly from your bank account. There's no borrowing, no interest, no debt risk. If you pay off your credit card in full monthly, credit cards work fine. If you tend to overspend or can't clear the balance, debit cards are safer – you can only spend what you actually have.

What are credit card balance transfer offers and how do they work?

Balance transfer offers let you move debt from one credit card to another, usually to take advantage of a lower interest rate. Many banks offer promotional rates (like 0% or low interest) for a set period – typically 6–12 months. You pay a one-time transfer fee (usually 2–3% of the balance), then you've got breathing room to pay down the debt without accumulating more interest. Once the promotional period ends, the regular rate kicks in, so aim to clear the balance beforehand.

How much can I save by switching cards?

Balance transfers can save you money if you're carrying debt. If you're paying 20% interest and switch to a card with a 0% balance transfer offer for 12 months, you could save hundreds or even thousands in interest. However, read the fine print – there may be a transfer fee, and the promotional rate eventually expires. Make a plan to pay off the balance before the low rate ends.

What’s a good interest rate for credit cards in New Zealand?

Credit card interest rates in New Zealand typically range from 12% to over 20%. Anything under 15% is considered competitive. Low-rate cards (12–14%) usually charge higher annual fees, while high-rate cards (18–25%+) often have lower fees or rewards programmes. Check interest.co.nz to compare current rates. If you pay off your balance in full each month, the interest rate doesn't matter – focus on annual fees and interest-free days instead. If you carry a balance, prioritise the lowest interest rate.

How do I avoid credit card interest charges?

Pay your balance in full each month before the due date. Most cards offer interest-free days (typically 44–55 days) on purchases if you pay the full balance. This means if you clear your card monthly, you'll never pay interest. Set up automatic payments or reminders so you don't miss the deadline. Avoid cash advances entirely – they attract interest from day one with no interest-free period. If you can't pay in full, pay as much as you can to minimise interest charges.

How can I choose the right credit card for my situation?

Consider how you'll use it. If you pay off the balance monthly, look for low or no annual fees and maximum interest-free days – the interest rate matters less. If you carry a balance, prioritise the lowest interest rate (at least under 14%) even if the annual fee is higher. Shop around on interest.co.nz to compare. Consider rewards programmes only if you'd pay off the balance anyway – rewards aren't worth it if you're paying 20% interest. Set your credit limit based on what you can afford, not what they'll give you.

How much can I save by switching credit cards?

If you're carrying $5000 at 20% interest and switch to a card at 13%, you could save hundreds in interest each year. If you spend $2000 monthly but pay it off, switching from a $150 annual fee card to a $50 fee card saves $100 yearly.

Is it worth paying credit card annual fees for rewards?

Only if you pay off your balance in full each month. Rewards programmes are pointless if you're paying 20% interest on debt – the interest costs far exceed any rewards value. If you do pay off monthly, calculate whether the rewards value exceeds the annual fee. For example, if you spend $30,000 yearly and earn 1% back ($300) but pay a $150 fee, you're $150 ahead.