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.