better deal Archives - Credit Simple NZ

Top tips to avoid over spending at Christmas

Credit Simple — Thu, 08 Nov 2018 22:44:10 +0000

As we approach the silly season and our bank accounts begin to bear the brunt of it, Kiwis should aim to be careful shoppers and only spend what they can afford.

We commissioned research which reveals nearly one in three New Zealanders put their Christmas and holiday spending on their credit card and are potentially facing a New Year hangover, saying they won’t pay the full bill before the due date (29%).

CreditSimple.co.nz spokesperson Hazel Phillips said the holiday season was a time for celebrating, but people needed to remember their limits.

“Christmas is a tough time to strike a balance between excitement and practicality,” Ms Phillips said. “When spirits are high, we tend to throw our budget out the window and an attitude of ‘she’ll be right’ can creep in. It’s a good idea to set a budget for your Christmas spending, which will help you avoid a New Year financial hangover that could wreak havoc on your credit score.”

Additional CreditSimple.co.nz analysis** into the average late payment rate over the past two years shows New Zealanders start falling behind in paying off their credit cards in October. By the time Christmas comes around they are already in the red, with the late payment rate peaking in the first quarter of the new year.

Although credit card spending is a concern, the research indicated that Kiwi spending wasn’t all doom and gloom. Most New Zealanders are likely to use EFTPOS rather than credit for their Christmas and holiday spending (55%), and a surprisingly high 38% say they’ll use cash – nearly the same number who say they’ll use a credit card (39%).

“Cash and EFTPOS are a great way to ensure you are only spending money that’s already in the bank,” Ms Phillips said. “But people still need to make sure that their holiday spending isn’t being pulled from money that should go to bills, and putting essential expenses on the back burner.

“Late or missed payments will damage your credit score and could prevent you from getting credit again – often just when you really want it. It’s crucial to keep your holiday fund separate and make a plan to pay bills on time to keep your credit score healthy.”

Top tips to avoid the Christmas spending hangover

￫ Put your accounts on automatic to ensure bills are still being paid while you are away

￫ Keeping track of your festive spending is the best way to avoid going over your budget this Christmas.

￫ Have a separate holiday account to avoid spending more than you can afford

￫ Check your credit score and make sure you don’t have any outstanding payments that could come to haunt you in the New Year

￫ Shop around for a better deal on interest
Chances are you could be getting a better deal on any loans, credit cards, mortgages and even utilities, you just need to shop around. If you’ve been paying your bills on time and have a good credit score, credit providers will be eager to give you a handsome deal since you’re a good risk. Negotiate with your bank and current phone, power, insurance and internet providers to see if they can offer you better rates, and see what their competitors would be willing to offer you, too. You might be surprised at how much you could save in the long run in fees and interest. (Check out our offers by getting your credit score right here on Credit Simple.)

*The research was conducted by Perceptive Research in November 2017 surveying a minimum of 1,000 New Zealanders online using nationwide sampling framework, the results are then weighted to Statistics New Zealand census gender, age and location data.

**Drawn from data held by illion. Credit Simple is part of a group of companies which includes illion New Zealand Limited, a leading credit bureau in New Zealand. Credit Simple operates entirely separately from illion and has complete independence.

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Budget Day: Steven’s had his – now it’s your turn

Credit Simple — Wed, 07 Jun 2017 23:40:34 +0000

Two weeks ago the new finance minister Steven Joyce delivered his first budget, and the last that this National government gets to table before heading to the polls in September.

While budget day doesn’t come with quite the drama or possibility of surprise that it did in, say, the 80s, it’s still a big deal. There’s a lot of detail, but essentially the government is announcing where it plans to get money from (taxes, borrowing, occasionally selling things) and how it plans to spend it (paying back loans, running the country, buying things).

What makes a good budget is pretty clear to most of us: we all get what we need to be healthy and happy as a country, and ideally the money coming in is more than the money going out – at least in the long run.

There’s little doubt that it’s a good idea for the government to spend some time thinking about this every year. After all, it’s our money!

But what about your own personal, family or household budget? That’s your money too, right? When’s the last time you spent a couple of hours with a big sheet of paper and a calculator to work out how things are looking?

Well you can put the FX-82 back in the drawer with the milk tokens and Pokémon cards, because in 2017, there’s an app for that! Check out our pick of the free online platforms that make it easy to understand your money situation, work out where the big expenses are, and make a plan to achieve your short and long term financial goals.

The Financial Capability Commission (formerly the Retirement Commission) is all about making sure we don’t run out of dollars before we run out of years. Take a look at their Sorted Budgeting Tool.
Westpac has a pretty good budget tool too (you don’t have to be a customer).
Need some hands-on free help? Take a look at Family Budgeting Services.

If all that calculating spits out an answer you don’t like the look of, the next step is to do something about it. When the government needs a bit more cashflow, it can raise taxes and magically have more money (possibly at the cost of some grumpy Kiwis). Long term, you could train to qualify for a higher paying job. A short-term option might be part time work, or an after-school job for the kids. And perhaps it’s time to sell off that exercycle you bought but never used.

On the money-out side of the budget, a bit of time spent looking at your expenses could make a real difference. Now we’re not going to join in the anti-avocado chorus … sacrificing things you really enjoy is a dumb idea. What isn’t so dumb, is looking at the big-ticket items like electricity, mortgage, insurance, internet, credit card, mobile phones and so on, and make sure you’re getting the best deal. A small percentage saving on a big regular bill can make a huge difference over time.

Unlike the government, there’s no law that says you have to do a budget every year. And you won’t get voted out of office if the books don’t balance. But with all the free online tools and advice out there now, we reckon it’s a pretty worthwhile way to spend a winter’s evening.

The post Budget Day: Steven’s had his – now it’s your turn appeared first on Credit Simple NZ.

Will the sun always shine on your mortgage?

Credit Simple — Tue, 29 Nov 2016 01:33:44 +0000

Mortgages in Auckland are not small. The average one is $393,000 and a quarter of them are at least $500,000. When you owe that much money you want to know things are going to be okay: that your property values will stay up, that your interest rates will stay down.

But the truth we come to know quickly in the credit rating business is that unhappy surprises have a habit of turning up. These post-GFC times have given us some very low interest rates. It’s possible they’ll stay low for some time. But it’s one thing to be a possibility, another to be certainty. Financial prudence says you need to ask: what if interest rates start making their way up?

Let’s say you’re already paying nearly half your income on your mortgage at the current rates – and we know that many people are – what are your options then?

Bill English, in Washington last month, raised the possibility that interest rates could rise. He talked about central banks around the world taking a fresh look at interest rates, given that low rates don’t seem to be having the stimulating effect on the economy they earlier had been. He says they see the possibility of interest rates making their way back up.

But when? He couldn’t say, and in fact no-one can for certain, and that’s what can make a career in the financial markets so fascinating and lucrative. A single event can create a multitude of uncertainties. The election of a new president could take rates in one direction, these earthquakes might take them in another.

But out in the real world of mortgage payments, it comes down to something simpler: “If, or when, it comes, can we afford a rate rise?”

If your rate lifts by two percent, the monthly cost of that won’t be trivial. On a half-million dollar mortgage, the extra monthly interest cost alone will be around $800. On a million dollar mortgage, it’ll be around $1,600 a month. Two per cent might sound like a lot but bear in mind the 10-year average for interest rates sits at 6.7 per cent.

No one wants to be a merchant of doom. But in our business, we know that the more clear-eyed you are about your financial position, the more stable your position will be when bad news blows in.

If this talk about rising rates worries you, what options do you have?

In our business, we don’t just offer people a credit rating, we also try to help them improve their financial position. What we often find is that people aren’t alway as open to changing their overall circumstances as it might suit them to be.

We may tell some people, for example, that they may imagine that their job prospects are best in Auckland and they can’t realistically consider any alternative, but that actually their track to better financial health might take you along roads they hadn’t considered. Maybe that road might take them through Gisborne or Invercargill.

But if that’s really a bridge too far, we have a couple of other suggestions: Maybe avoid adding to the mortgage to fund lifestyle/house extensions/spending money right now. If a rise in rates might mean that some months or years from now you’ll struggle to pay your mortgage, leading to a default and a negative impact on your ability to borrow later in life, throttle back, for now.

At the very least we’ll tell them to be looking for a better rate. You’d be surprised how keen the other banks may be to take your call right now.

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How should you talk to your bank? Like a boss, says Damian Christie

Credit Simple — Mon, 28 Nov 2016 19:05:57 +0000

When the time comes to re-fix your mortgage rate, it pays to shop around, says TV presenter, documentary producer and man with a Twitter account, Damian Christie.

“I’ve always thought the banks are pretty hopeless at retaining their customers,” Damian says. “They offer a lot of enticements to new customers: free TVs, free money, low interest rates.” But that seems to be where the batteries run out. “It seems like they just assume people can’t be bothered moving once they’re there.”

So when their mortgage fixed term with Westpac was up, he thought he’d go shopping. And we thought we’d check in to see how it went.

“First of all I said to our bank, how about it? And they came back and said “Oh, look we’re not really prepared to do anything for you.” He’d heard stories about Westpac not being all that willing to play ball. At the time the rates being advertised had numbers starting with 3. He thought the bank could have come to the party, but no. “And I’m like: you know, that’s not cool. We’re not going to be stuck on 5 point whatever it is when the other banks are offering threes.”

Damian Christie, man with a Twitter account

Damian decided to take advantage of a good Twitter following to get some action.

“I decided just to put a shot out there. I know that banks are pretty responsive online as well – they’ve got some good cool media people out there. So I just tagged in a few banks on Twitter and I said alright ASB, Kiwibank, BNZ, you banks, we’re looking for a new home for our mortgage who’s prepared to say what?”

The responses were good – and quick.“Kiwibank uploaded a little video of them doing a dance with my name on it, and I got some quick calls from people. In the end I was able to compare side by side what people could really do – rather than just what the rack rates they’re offering are – and what cash they’re prepared to offer you on top, and that sort of thing.”

They ended up narrowing it down to a couple of them: Kiwibank and BNZ. In the end BNZ came up with the goods (although Kiwibank had a very good deal too).

“We got a bit of cash. By the time we paid our lawyer’s bill – which was a bit more than I thought – there was some money left over and we were on a much better rate and, I think, with a bank that’s more committed to actually doing something.”

Sweet deal. But no good idea goes unpunished. Westpac, the bank they were leaving, put a spanner in the works over a cash bonus payment clawback. “We hadn’t got around to signing the extra little bit of paper that got them to chuck that money into our own account – my own slackness, but I thought well the only ones being hard done by are us, right? So they decided they would try to make the clawback date not the date of our refinancing but the date of when we signed that little bit of paper to get the money into our account. So just when we’d gone unconditional with BNZ and everything was being drafted, on the last day Westpac said ‘no you’ve got to pay back that two grand’. So I went into attack mode, started emailing some people like corporate affairs and public affairs and whatnot and started tweeting about greed and I had a very good conversation with my account manager.” Long story short, Damian says, the bank decided to let it go.

He thinks the banks can be quite short-sighted when you look at the way things are working these days: “We’ve seen from telcos, internet companies, power companies, people are increasingly prepared to switch if they think they’re gonna get a better deal somewhere else.

“My parents are old-fashioned,” he says. “They’ll just stick with the bank they’ve got and even within their mortgage they won’t look at changing rates or trying to negotiate or argue anything like that for a better rate they just take what’s offered to them because it’s that old school, you now, the bank is the boss and you just accept what’s on the paper you know?”

But their boy has a Twitter account. And that might not sound like much but it can add up to a pile of dollars in your favour if you’re prepared to use it.

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