So you’ve been sifting around on CreditSimple.co.nz and seen some sweet deals, but you’re thinking it’s wayyyyy too hard to switch banks, right? Errr, pull up a chair and sit down for a moment. Actually, switching banks is easier than ever.

Thanks to internet banking, our bank accounts capture loads of information – think about how many automatic payments or preloaded payees you have on your account (mum, dad, utilities, the local pie shop and so on) – and having to reload all of that is a major barrier. Or at least it used to be.

In 2010, New Zealand banks agreed on a set of rules about how they would co-operate when a customer was lured by a rival. They tweaked those rules in 2012 and now it’s easy as … well, it’s easy as.

Banks now co-operate freely with each other when customers switch. An organisation called Payments NZ governs this, and sets and oversees the rules and standards around payments to enable innovation as well as strong self-regulation. (Payments NZ is owned by eight New Zealand banks.)

As a customer, all you have to do is tell your new bank that you want to switch information from your old one, fill out a form and sign it, and your old bank has to hand over all your details to help your new bank set you up. You (almost) don’t have to do a thing.

The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.

The post Flipping the switch: Why it’s easier than ever to switch banks appeared first on Credit Simple NZ.

Banking is moving into a new high tech universe. Like many other aspects of our lives the digital revolution is about the change the way we bank. We may even use Snapchat, Facebook, Instagram or other social media platforms for our banking with the traditional bank relegated to providing wholesale services.

Here is what I think:

Banks have got us by the short and curlies.

Whichever way we turn there are fees, fees, and more fees. The mainly Aussie-owned banks keep their shareholders very happy with all the profit they earn from us. Sometimes it even feels like they have an intravenous line hooked up to our wallets. We get hit when we go overseas with fees at both ends to withdraw our money. What’s more there are overseas margins charged on transactions we make when we buy in person overseas or via the internet.

What about banking of the future?

Well, overseas there are banks offering services that are light years ahead of what we have here in New Zealand. Take Monzo bank in the UK or Simple in the US. Instead of a traditional bank account as your home screen you view your money through your budget as a landing page and can see how you’re tracking for the month. They allow you to set targets for monthly spending, show you at a glance what’s safe to spend and send notifications when you’re spending too quickly. Imagine that?

Yeah. Let’s get going.

Hold on there. Monzo or other banks can’t just set up shop in New Zealand. They need to get a banking or non-bank deposit taker licence from the Reserve Bank of New Zealand, which involves jumping through more than a few hoops. But never say never. We will get this type of service eventually from our existing banks or quite likely from a nimble start-up.

Do I even need a bank?

Quite right. In the future we could do our banking on our social media account. Why can’t our PayPal account or Apple Pay, Android Pay, Samsung Pay, or even Alipay from Chinese giant Alibaba. become our banks? We can already, for example, send money to others via PayPal if we have their email address. With their reach, social media platforms such as Facebook, Snapchat and Instagram can run banking type features. In the US you can already send money to a friend via Facebook Messenger. All you do is open a message, tap the $ icon and add your debit card to send the money. There are other peer-to-peer payments systems. In China WeChat offers financial services and some say there’s a battle raging to become the WeChat of the West.

What about Bitcoin and other crypto currencies?

Bring it on. I can’t wait until I can go on holiday, to say, Brazil, walk into a local change house and swap the equivalent of $NZ100 or $NZ500 of Bitcoin for local currency for a few cents charge. This is already happening on a small scale. An example I’ve come across is Filipino workers in the United States who send Bitcoin back to their families, who then cash it in locally. And in the US there are Bitcoin ATMs, which allow you to withdraw your Bitcoin in local dollars. Bitcoin doesn’t need a bank and can be managed on your smartphone.

But what about now?

You’ll have to hope that someone has the balls to open up a Monzo equivalent in New Zealand. With a service like this you can use your account abroad with no nasty charges, which is amazing for regular travellers or those who want to transfer money to friends, relatives and others overseas or buy online.

It won’t be long before banking gets a whole lot more efficient in terms of time and cost.

Banks are quaking in their boots. They could be the next industry to get the digital goodbye kiss. The reality is that we may not even need banks in the future. They’re just middlemen and that’s something that digital technology can do. Right?

The post What does the bank of the future look like? appeared first on Credit Simple NZ.

Don’t believe you have to have a credit card. Paying interest sucks. It sucks the lifeblood out of your finances. That’s because unless you clear your entire bill within the interest free days, you pay interest.

That interest means you’re paying as much as 22.95% more than your mates at the mainstream banks for the same things, which has a detrimental effect on your finances over time.

Other (cheaper) ways to pay

Thankfully there are way more credit-free ways to pay than ever before that are far better for your bank balance. Here are some of the options:

Debit card. One of the arguments for needing a credit card is the ability to shop online. All banks now offer either Mastercard or Visa debit cards. They look like credit cards and can be used anywhere that displays the Mastercard or Visa logo, but you can only spend your own money, not credit.

EFTPOS. We all know how EFTPOS works. Now you can pay online with just an EFTPOS card through some banks at a number of etailers such as MightyApe, BurgerFuel and Smith & Caughey’s department store by choosing “Online EFTPOS” as your payment method at the checkout. A text is sent to your online banking and you approve the payment. The first banks to offer this were ASB and The Cooperative Bank. find out where you can pay with online EFTPOS visit Paymark’s website here.

POLi and account2account. Both POLi and account2account are payment methods that take the money direct from your bank account. Your payment is approved immediately. You can use POLi and account2account to pay online for goods at The Warehouse, Bunnings Warehouse, Xero, NZ Transport Agency, Air New Zealand and others. Despite the fact that this payment method is widely used overseas and offered here by trusted companies, New Zealand’s banks say that it’s not secure and users are breaching their terms and conditions if they pay this way. In the UK regulators forced banks to make customers’ data available to them, meaning they can use this type of payment system without fear.

Ping it. In the old days we did bank to bank transfer or paid cash for Trade Me purchases. Then Trade Me brought in Pay Now, which required a credit or debit card. Now they’ve added Ping. This allows you go pay with credit, debit, or straight from your bank account. The advantage of this is you only need an EFTPOS card to do it. The disadvantage is you are setting up a direct debit agreement with Trade Me and not all members are comfortable with that.

Pay later. Trade Me and other retailers are starting to offer buy now pay later schemes. You buy now, receive the item, and make interest-free payments over several weeks. Laybuy.com, PartPay and Trade Me’s Afterpay all offer this. The problem is if you miss a payment the charges can prove more expensive than interest. Non-payment can also put a black mark on your credit record.

Pre-paid travel cards. Pre-paid currency cards such as Loaded for Travel, OneSmart and Cash Passport work like debit cards when you’re travelling overseas. The catch is that you pay fees and commissions that make this an expensive way to spend.

PayPal. This online payment method that you can load up and spend with isn’t used all that often in New Zealand. If you’re buying from eBay and overseas stores you might find having a PayPal account useful.

Bitcoin. You can pay for a growing number of real life purchases using your Bitcoin wallet. I do own a very small amount of Bitcoin and look forward to the day when I can spend it and bypass my bank’s fees.

Cash. What’s that you say? Sometimes ditching the plastic and spending cash is the most sensible option. Take it out at the beginning of the week, split the money between envelopes for different purposes such as shopping and entertainment and once each envelope is empty just stop spending.

There are other forms of payment coming on. For example Apple Pay has made it to New Zealand in a limited way and Alipay is on its way. However payments from both are connected to your debit or credit card so aren’t in effect changing the way you spend.

Of course credit cards do have uses when you have an emergency. But everyday things such as buying groceries or school uniforms aren’t emergencies. They need planning for.

The post Using a credit card for everything? There are other ways to pay appeared first on Credit Simple NZ.

Watch out! Your credit score could soon affect the interest rate you pay. That’s good if you’re a “unicorn” with a credit score from 801 to 1,000, and not bad if you’re a “thoroughbred” with a score of 601 to 800.

If, however, you’re a credit “donkey” at the very bottom of the credit score pile, a credit pony at 201 to 400, or a farm horse from 401 to 600 you could well pay more.

Why donkeys pay more thanks to their credit score

That’s because New Zealand lenders are turning to a new style of “risk-based pricing”. That means they offer different rates to customers depending on how bankable you are as a borrower. Here’s what you need to know:

• It’s new. Risk-based pricing is new in New Zealand. In the past “negative” credit scoring only measured you on your defaults. The government changed the rules to allow “positive credit reporting” that takes into account your payment history. The data enables lenders to make better judgements about whether we’re more likely to pay or default.
• Who’s offering it? Peer-to-peer lenders such as Harmoney do this, says Steve Brown, director of bureau engagement at illion. If you want to borrow money from a peer-to-peer lender you’ll be rated from A-E according to your credit score. It’s very much the norm now globally for banks to price according to credit scores, We are just a little behind in this downunder. The Co-operative Bank was one of the first (if not the first) banks to offer risk-based pricing in New Zealand. It reduces interest rates, for example, if you have your main income paid into your everyday account. That makes it safer for the bank to lend to you.
• Why do it? Lenders want to attract the best borrowers who they know will pay the loan back without being chased. By offering lower rates to the unicorns and thoroughbreds banks and other lenders reduce their risk. It’s also a marketing tool to attract better customers. Likewise if they can see from the positive credit reporting data that you have an adverse credit history they can charge more. It’s only a matter of time before credit card interest rates are based on your credit score as well.
• What about mortgages? Sooner or later you’ll be offered mortgage rates based on your credit score, says Brown. It already happens informally. Banks are sometimes willing to knock a few points off their mortgage rates to gain or keep a good customer. Conversely, borrowers with less than sterling credit scores sometimes have to go to second tier lenders such as finance companies to get a mortgage at all. Typically the rates will be higher than banks offer.
• Wait, but my credit score sucks. As with mortgages, there is already an informal system that means borrowers pay more if they’ve had debt disasters in the past. Kiwis with really poor credit scores may not be able to borrow from the bank or credit union at reasonable rates and be forced to go cap in hand to finance companies. For the very worst credit scores the only choice may be payday lenders that charge exorbitant rates of interest.

Never fear. CreditSimple is here with some good advice even if you have sabotaged your own credit score. You can get yourself ready for risk-based interest rates by cleaning up your credit score now.

How to get better loan pricing

Start by checking your credit score right here on Credit Simple. You’ll also get some of your key credit history (just click on the ‘credit file’ tab once you’ve accessed your dashboard). Then get your full credit record by ordering your report from the three agencies illion, Centrix and Equifax. Remember that there’s always a free option – you don’t have to pay, you just need to wait a little bit longer. Go through your report with a fine tooth comb. If you think any entries are incorrect or unfair, contact the bank, finance company, or other credit provider such as utility companies  and ask for them to remove these.

The next step to cleaning your credit record is to pay off any debts that have led to defaults. Ask the credit provider to remove the default once you have.

Finally, start paying each and every bill on time including your rent if you’re a tenant. If you need to start no excuses budgeting to ensure this happens, do it. Every single payment is a positive mark on your credit record and soon you’ll be moving out of donkey territory and becoming altogether more desirable to lenders.

The post How your credit score affects the interest rates you pay (and welcome to the brave new world of risk-based pricing) appeared first on Credit Simple NZ.

I remember it well. The little green booklet that I’d carry into the local branch of the savings bank, with my grandparents’ Christmas money or some such, all ready to save up for some far flung future when I’d be able to buy Something Important.

The wee booklet was received by the teller like a benediction, and after passing it through a machine that typed on it (TYPED!) it was returned to me fresh, newly updated, bearing the magic words “with interest” and I could watch my wealth passively grow.

Of course, in all the time I was at school it grew by about a dollar but hey. I knew it was growing, albeit slowly, I knew what savings were (they were imaginary) and I knew about personal finance.

I was set for a life of financial management.

When I left home I went boarding and my income of $108 a week (this was quite some time ago) was broken up like this:

$100 – rent money.

$8 – everything else.

Oh you can imagine the fun we had in those days. Still, it was Hamilton after all.

And then I went flatting.

Suddenly I had to budget. I had a monthly bursary payment that only came in every quarter, I had rent to pay, power, phone. Occasionally someone in the flat would buy food. Oh and I had a car which consisted mainly of repairs stitched together with what meagre earnings I could afford and then some.

At one point I bought a fridge because the flat needed one and while we couldn’t afford to pay up front we could certainly buy one on tick. The never-never. Just a few pennies a week for ever more. Honestly, I must have paid for that fridge three or four times over and STILL they wanted more.

The problem was I really had no idea how to manage money. None whatsoever. I’d never had to. I’d never seen Mum and Dad do any more than write out cheques (ha) to buy groceries.

Not once had anyone sat me down and talked about overdrafts, about income, income tax, about credit cards and about budgeting. I knew I had to save special event money but who had that? My grandparents had inconveniently stopped sending me birthday money about the time that they died so my one usable piece of financial management (put the money in a savings book) was useless to me.

It took several years of being terribly poor, of hiding from the fridge police and some really awful jobs before I got on top of the whole thing and even now I look over my shoulder expecting the landlord to come banging on the door about my rent.

Kids today don’t have a clue either, and that’s on us. If you have kids it’s vitally important you teach them all the important stuff in life. How to make a decent cup of tea. How to bring you breakfast in bed. How to be polite to strangers. How to whistle, but above all else, how to manage their money.

Start by not hiding your own finances from them. Help them learn by showing them what you do. I get my kids to sit in when we do the accounts each month so they can see us managing our money sensibly or what passes for sensible in our household.

When we were saving for a holiday we go the kids involved so they could make the call – do we go out for pizza or put the money into the holiday – and they not only loved it, they learned from it.

If we don’t teach them I’m not sure how they’re going to learn and frankly I’d rather they didn’t learn the way I did. The hard way is no fun at all but if they don’t know to value the money they earn there really is no other way to do it.

The post Are your kids learning about finances the hard way or the easy way? appeared first on Credit Simple NZ.

Credit is great. It means you can buy what you want right now! But before you get too excited, too many Kiwis get themselves in the doo-doo with their credit. You don’t want to be one of them.

Often it’s the people banks call ‘revolvers’ who get themselves into a complete debt disaster. These are the people who only make the minimum payment each month and see their debt spin out of control.

Sure you can go bankrupt or use the No Asset Procedure. But quite frankly you’d be better off if you never got yourself in that situation in the first place.

Understanding what can go wrong with your plastic fantastic approach to spending is a really good idea. You can learn some lessons from New Zealand’s Banking Ombudsman, whose job it is to ensure we all get treated fairly by our banks:

• Naughty you spending too much! So you think the bank’ll bail you out if you go on a spender bender? One Kiwi complained to the Ombudsman that the bank was irresponsible letting him borrow 20% over his credit limit and demanded that the bank to reimburse him for his own spending. He was lucky and the bank wiped his interest and agreed to an affordable repayment arrangement. But he didn’t get the debt wiped as he hoped.
• Dodgy shop debt disaster. “Mrs S” was two weeks into her five-week holiday when her credit card maxed out. She’d loaded extra cash on it before leaving New Zealand and couldn’t understand what had happened. It turned out she’d paid for purchases without actually checking what she was being charged. Even though the trusting Kiwi customer was the victim of a scam, she still had to pay the bank back it was her signature and she was the one to punch in her PIN. Other Kiwis have tried to get banks to refund money when they’ve been scammed. But mostly they fail. 
• Sexually transmitted debt. One of the worst credit disasters is one that you’re not even responsible for. Cupid’s arrow isn’t very smart sometimes and spenders fall in love with savers. The trouble is that as soon as you sign loan documents together you become responsible for your feckless partner’s debt. Watch what you’re signing. Mr B was long divorced when his ex-wife went bankrupt. He’d forgotten they had a joint credit card and it was never cancelled. As a result he was liable to repay his ex-wife’s debts.
• Going guarantor: When Kiwis sign guarantees for others they often forget about them. Often the fine print means that you’re responsible for all future borrowing by that person. Parents sometimes even have to cough up for their ex daughter or son-in-law’s debts long after the couple have split. 
• The bank helping itself. Banks can dip into money in your accounts. One Kiwi customer sold company assets because the business desperately needed cash. But he owed money on his credit cards the bank helped itself to sale proceeds to pay down the outstanding debt. This sometimes happens in personal lending as well, says Banking Ombudsman Nicola Sladden. The moral of this story is, if you’re in debt up to your neck, keep your cash in a separate bank.
• Goodbye insurance money. Another Kiwi bank helped itself to a customer’s insurance pay out for a $65,000 fire and applied it against his mortgage. The cash grab meant he didn’t have the money to rebuild. Sladden says people don’t realise that customers’ home loan agreements are worded so that the bank can go to the insurance company direct and take control of the proceeds.

Whew! Does that make you scared of credit yet? If these and other credit disasters fill you with horror, don’t put your credit card or overdraft away; you can become a master of your cards. Create a budget. It doesn’t need to be scary. Think of it as spending plan where you divvy up your pay each week, fortnight or month, so you know how much you can spend in each category and you pay a fixed amount off your debt. This really does work and over time you’ll be debt free. Do it. 

The post Debt disasters you didn’t see coming appeared first on Credit Simple NZ.

Budgeting, planning and all the good credit habits in the world are no good if someone goes and nicks your hard-earned money. These days, though, the bad guys are unlikely to turn up with stockings over their heads and big sacks marked “swag”. Digital crime – money being stolen directly from your bank account – is on the up.

There are two ways this can happen, and one is a lot more common than the other.

“Hacking” is what most of us think of when we imagine money being nicked from our bank account (or what we blame when our Facebook account suddenly starts posting amazing deals on Oakley sunglasses). Real hacking though – someone sitting down and going all out to bypass your bank’s security systems just to get at your grocery money – is pretty rare. It’s hard, it takes time, and crooks are lazy.

“Phishing,” on the other hand, is a lot more common. And that’s where underpants come into it.

Phishing relies on what computer security people call social engineering. Instead of writing some clever code or virus, a phishing attack typically uses something simple like an email or a Facebook message to lead you down a path that ends in you sharing your bank login details with the bad guys.

The messages and emails can look pretty convincing, and before you know it you’re at what looks like a banking login page, giving the keys to your virtual vault to who-knows-who.

Give away that password, and you haven’t been burgled: you’ve left the front door open and told the crooks which mattress the money is under.

Your best protection? Treat your banking passwords like your underpants.

Change them often
OK, we’re not suggesting you change your password every single day (or more often, if you’ve been for a run). But a password that hasn’t changed since you opened the account is hack-cident waiting to happen. If keeping track of ever-changing passwords is a hassle, you could always try a reputable password management app.

Don’t share them
Underpants are personal and so are banking passwords. So no matter how much you trust someone, don’t ever share your password with them. That goes for your bank, too! The only place a bank will ever ask for your password is when you’re logging in to online banking. And they’ll never link you to a log-in page via an email or Facebook message. (Bonus tip: same goes for your credit and EFTPOS card PIN!)

Don’t leave them lying around
You wouldn’t leave your undies on the desk at work, or stuck to the fridge door at home (well we really hope you wouldn’t). Same deal with your banking password. Writing it down is risky enough. If that’s the only way you can remember it, though, put it somewhere no one will think to look – and don’t make it obvious what it is.

The post Want to keep your money safe online? Think about your underpants appeared first on Credit Simple NZ.

I banked a cheque the other day (yes, I know! Some people are still using cheques) and as I stood there at the counter, the teller asked me if I had my KiwiSaver with the bank.

“No, it’s elsewhere,” I said.

“Why don’t you bring it to us?” he asked.

“Because I’m with another bank and their fees are lower,” I said. 

“But you should have your KiwiSaver with your everyday bank,” he argued.

Now this made me a bit angry pants. Generally speaking, there’s zero benefit to you as a consumer to have your KiwiSaver bundled with your everyday bank. Sure, some people can’t handle the idea of dealing with multiple banks, but let’s be clear: you don’t get a kickback from your bank, or a thank you card at Christmas, for having it all together in one big financial lump.

The bank, of course, does benefit; they get your extra business. 

I asked our man at the bank why I should have my KiwiSaver with the bank. What benefits would the bank give me?

“It just makes sense to have it all together,” he said, shifting uncomfortably in his seat, realisation dawning that the woman who had just banked a cheque (I KNOW  –  A CHEQUE) might have been born at night, but it wasn’t last night.

I gave him a hard time for a while, and I hope he won’t continue trying to persuade people into bundling their KiwiSaver, “just because”.

I’m not the first person to experience this. Journalist Tamsyn Parker wrote about it for the NZ Herald, where Financial Markets Authority spokesperson Paul Gregory said that people approached by their bank to switch their KiwiSaver business should ask for three reasons why they should switch and then ask the bank to back up those reasons with evidence.

“If they say they have the top performing fund in the last five years ask them to prove that. Make the person work for the business.”

Banks have an obligation to represent their KiwiSaver scheme in a way that’s accurate and balanced, and above all, they should put the customer’s interests first, says Paul, and remember that bank tellers may get a commission for sales they make.

Personal finance writer Diana Clement says:

“I’m horrified to hear this. As far back as 2014 the Financial Markets Authority put banks on notice for using underhand tactics to lure customers’ KiwiSaver accounts away from their competitors by using the ‘do you want KiwiSaver with that’ approach.

“The FMA investigated and found that banks were using all sorts of tactics such as asking customers if they would like to be able to access their KiwiSaver information online alongside other bank account information, without explaining that this will mean the customers must transfer their KiwiSaver to the bank. Or, signing customers up for a credit card, personal loan or other products and providing a KiwiSaver transfer form alongside other documentation for signing, leading to customers inadvertently agreeing to transfer their KiwiSaver to the bank.

“Tellers don’t the skills and training to provide adequate advice for individuals to make a decision at the counter about the future of their retirement savings. If you’re approached in this way about your KiwiSaver account, proceed with caution.”

The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.

The post Does your bank reckon you should have your KiwiSaver with them, all under one roof? Read this first appeared first on Credit Simple NZ.

So you’ve been sifting around on CreditSimple.co.nz and seen some sweet deals, but you’re thinking it’s wayyyyy too hard to switch banks, right? Errr, pull up a chair and sit down for a moment. Actually, switching banks is easier than ever.

Thanks to internet banking, our bank accounts capture loads of information – think about how many automatic payments or preloaded payees you have on your account (mum, dad, utilities, the local pie shop and so on) – and having to reload all of that is a major barrier. Or at least it used to be.

In 2010, New Zealand banks agreed on a set of rules about how they would co-operate when a customer was lured by a rival. They tweaked those rules in 2012 and now it’s easy as … well, it’s easy as.

Banks now co-operate freely with each other when customers switch. An organisation called Payments NZ governs this, and sets and oversees the rules and standards around payments to enable innovation as well as strong self-regulation. (Payments NZ is owned by eight New Zealand banks.)

As a customer, all you have to do is tell your new bank that you want to switch information from your old one, fill out a form and sign it, and your old bank has to hand over all your details to help your new bank set you up. You (almost) don’t have to do a thing.

ASB, for example, has a team of ‘personal switchers’ who manage the process, and Kiwibank has EasySwitch. ANZ will even close your old accounts on your behalf.

So if you find the deal you’re after through Credit Simple, don’t be afraid to flip the switch. Check out our deals here.

The post Flipping the switch: Why it’s easier than ever to switch banks appeared first on Credit Simple NZ.