Interest-free overdrafts while you’re a student might be tempting, but new research we commissioned shows 66 per cent of tertiary students aren’t paying back their interest-free overdrafts before leaving university, and an alarming nine per cent took more than two years to pay their overdraft back now. 

Students are going into university knowing they will likely be faced with a large ‘interest-free’ IRD bill at the end of it. However, the research suggests this ‘interest-free’ appeal is making student finance deals tempting with nearly a third (31 per cent) of tertiary students making use of interest-free overdrafts. 

CreditSimple.co.nz spokesperson Hazel Phillips says banks offer some great deals to students, however students need to change their mindset and use these deals to their advantage. If a financial plan is put in place, incurring interest can be avoided.

“Interest-free finance deals are a perfect way for students to start building their credit report. If regular payments are made before interest starts incurring, it will be positively reflected on a student’s credit score and provide a foundation for the future,” Hazel says. 

Students need to have a financial plan in place when applying for interest-free overdrafts to avoid being stung with high-interest payments they can’t afford.

“It’s important students are using interest-free deals correctly and that they put payment plans in place to ensure the debt is paid before they leave university. When interest starts being added to loans, it makes it harder to keep up with minimum payments and a missed or late payment can damage your credit score.” 

Five top tips for managing interest-free overdrafts and maintaining a healthy credit score:

1. Make a payment plan to ensure the debt can be paid off in full before agreeing to the terms
2. Set up weekly automatic payments
3. Review your loan every month and ensure you’re on track to clearing the debt
4. Make additional payments to help clear the debt
5. Regularly check your credit score via CreditSimple.co.nz to make sure your payments are up to date and you don’t have any credit defaults

Most banks in New Zealand offer special rates to students, however when students leave university remaining debt can occur high interest.

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When you get an interest-free loan, it’s always interest-free, right? Wait a second. It’s only interest-free if you toe the line with the terms and conditions of the loan. And research we commissioned has found nearly half (48%) of Kiwis have made the most of deferred interest deals to purchase items with what can be a ‘free’ loan, but even the best intentions of paying off the loan in time can catch some consumers out.

While most Kiwis paid off the loan within the interest free period, 12% did not complete the payments and paid interest on their purchase, the research shows.

For those 12%, almost half (47%) took more than a year to pay it back in full and ended up paying a significantly higher price for the item. And according to our analysis*, 18% of people with a personal loan have been overdue on monthly repayments at least once in the past 12 months.

Interest rates charged on store cards can be as high as 26% – higher than credit cards and personal loans from banks.

CreditSimple.co.nz spokesperson Hazel Phillips says paying off a hire-purchase interest-free deal on time is doubly positive: you avoid having to pay interest and it can help improve your credit score.

“Young people setting up their first house or flat often lean heavily on credit cards and interest-free deals to buy furniture and appliances. Our own data shows that missing a payment on a finance deal is one of the biggest factors impacting your credit score,” she says.

“A good credit score is 500 or more on a scale of 0 to 1,000.

“Falling behind in regular payments soon starts to affect your credit score. Some people get into the habit of paying as late as they can every time, but that’s not a good strategy. The reality is with banks now reporting ‘positive’ credit behaviour such as paying on time, late payers stand out.

“You may earn a few cents extra interest by delaying bill payments. But it’s just not worth it if it’s wrecking your credit score, as it can affect your ability to get credit down the track.”

*Drawn from data held by illion, Credit Simple’s parent company.

This research was conducted for Credit Simple by Perceptive Research in July 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.

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Credit scores may tell us more about Kiwis than just how good we are at paying bills – our research shows they also hint at voting preferences.

We overlaid New Zealand electorates with average credit scores and found those in National electorates are more likely to have a higher average credit score (652) than those in Labour electorates (621).

The six highest average scoring electorates are all National: Rodney, North Shore, Selwyn, East Coast Bays, Pakuranga and Waimakariri. The three lowest average scoring electorates are Labour: Manurewa, Mangere and Manukau East. The highest scoring Labour electorate is Port Hills (713), while the East Coast takes the title of lowest scoring National electorate (566).

The single highest scoring electorate is North Shore, with an average credit score of 735, while Mangere has the lowest average score at 487. The sole ACT electorate, Epsom, holds the seventh highest average credit score.

Credit Simple spokesperson Hazel Phillips says the research provides an insight into one aspect of voters’ financial lives and the issues that will likely be important to them as we approach the election.

“Credit scores are a key indicator of credit health,” she says. “New Zealanders with low scores are likely to have trouble accessing credit such as mortgages, loans and sometimes even power and phone contracts. They’re also more likely to pay high interest on any loans they can get.”

“Conversely, those with high credit scores will score low-interest deals and have more options when it comes to credit. Our research suggests these levels of credit freedom may play a role in the policies and parties New Zealand voters support,” she adds.

The post State of the nation: National voters outdo Labour supporters when it comes to credit scores appeared first on Credit Simple NZ.

Living life large while on holiday doesn’t mean blowing your budget. It’s possible to enjoy every minute of your well-deserved break and possibly come home with cash to spare.

Here are our tips to travelling well while spending less:

1. Package it up

There was a time when the phrase ‘package deal’ made us think of budget airlines, cramped hotel rooms and noisy, sunburnt tourists. Now, thanks to companies like Luxury Escapes, it’s easy to nab a great deal to an even greater location. To save money while you’re away, look for deals that include food, pampering, activities and transfers. A word of caution: if you don’t have an all- inclusive deal, research the hotel and make sure that the dining options suit your budget. There’s no point in paying a cheap rate for a room if you’re only going to spend the equivalent on food every day.

Save: $$$$$

2. Set a budget

It sounds obvious, but set a budget before you go on holiday. Factor in things like food, alcohol, activities, travel (including hotel transfers), souvenirs, gifts and duty-free. Give yourself something like a 10% buffer so that you don’t feel the pinch if you go over. If you stick to your budget, that extra 10% or so will feel like extra money in your wallet – and you can treat yourself to a post- holiday massage as a reward.

Save: $$$

3. Get a travel money card

No one wants to come home from holiday to unexpected bank fees. Before you travel overseas, check with your bank to find out what charges you may be up for. Or consider getting a travel card. They are usually accepted everywhere a credit or debit card is accepted and you load them up with cash before you go so you can only spend what is on the card. The perks are, you avoid substantial bank fees and you can set the budget you want to stick to.

Save: $

4. Dine out

What better way to experience a new destination than to taste local food? Skip expensive hotel restaurants and head out to some local restaurants. Ask around for recommendations – and don’t just ask fellow tourists. Chat to some locals for the down-low on where to go for great cheap eats.

Save: $$

5. Stay in

You don’t have to eat every meal out. Book an apartment or room with a kitchenette and cook your own meals. Even if you just make your own breakfast or lunch a few times, you will save.

Save: $$

6. Research, research, research

Before you travel, read up on all the things you want to see and do. If you have a plan, you’re less likely to waste money on activities that turn out to be, well, a waste of time. Leaving more time – and money – for you to sit back, have a mojito and think about the next holiday you’ll take with the savings you’ve just made.

Save: $$$

The post Six ways to save money while on holiday appeared first on Credit Simple NZ.

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What’s in a name? When it comes to your credit score, it could be more than you think.

Here at Credit Simple, we’ve got access to a wealth of data around credit information and demographics. So we thought we’d look into first names ranked by credit score.

Names such as Beryl, Joan and Muriel might sound old-fashioned, but they’re winning in the health stakes when it comes to credit scores. Enid, Joan and Winifred take out the top three spots for the highest scoring names (all are in the 800 range by score average) while newer and more creative names such as Cheyenne, Tyson and Junior are at the bottom of the list (Cheyennes average a 373 score). And Krystal with a K scores lower than Crystal with a C.

Women generally have higher scores than men and this shows across the top 10 list – all of which are female names. And when broken down by generation, women still lead; names such as Sheila, Gaynor and Philippa are the top three for Baby Boomers, while Hilary, Lynley and Jillian lead Gen X.

High-scoring names also show the trend of a changing multicultural society, with Asian names featuring heavily in the top Gen Y bracket: Jing, Yan and Ying score 605, 599 and 598 respectively.

CreditSimple.co.nz spokesperson Hazel Phillips said it was a very close race between women and men when comparing average credit scores, and women are actually one step ahead across all generations.

“The data shows that overall, women have an average credit score of 621 compared to 617 for men,” Ms Phillips said. “This is consistent across generations: Gen Y we see 483 for women compared to 481 for men; Gen X, women score 609 while men score 606; and Baby Boomer women score 722 while men score 720.”

Ms Phillips said that although women tend to average higher than men, the top credit score by name is largely reflective of age.

“Older names popular in previous generations such as Enid, Joan, Winifred, Beryl and Muriel all rank in the top 10, which shows your credit score typically gets better as you get older. As people age they tend to become more financially stable and responsible, and have a longer credit history which helps raise their credit score.”

Ms Phillips said that no matter what your name, knowing your credit score is the best place to start when it came to credit health.

“Regardless of your name or gender, it’s important to know your credit score to determine how credit-worthy you are, including what you might need to do to improve your score if it’s low, or how to use a good credit score to get a better deal on with banks and utility providers.”

You can check if your credit health is in shape by getting your credit score for free right here at www.creditsimple.co.nz.

The post What’s in a name? Beryl, Joan and Muriel take out the top spots for credit scores ranked by name appeared first on Credit Simple NZ.

Our research shows that 18% of people have money or finances their partner doesn’t know about.

I know two couples who are total opposites when it comes to how they manage their joint finances.

One couple – first names James and Jenny, surnames omitted to protect the innocent – pools their finances in full and takes a generous approach, with one exception: they each have a ‘fun account’, into which an equal sum of money is fed each month, and the rule is they can’t complain about what their partner spends his or her fun money on. James fritters his away on coffees and work lunches, while Jenny (a keen diver) saved until she had a good chunk of money and then … bought a boat.

The other couple – Tony and Amy – splits every tiny expense down to the last detail. It’s not unusual to go out to dinner with them and see them conducting an intricate analysis of the bill to see if one person has – OH NO – paid less than the other. There’s a constant dance between them of money going back and forth depending on who owes whom what.

Last month we did some research on more than 1,000 Kiwis to see how we manage our romantic finances. Turns out half of us pool our money completely with our partner, while nearly 23 per cent split expenses 50/50.

And we were astounded to find out that 18 per cent of people have money or finances their partner isn’t aware of – and nearly 64 per cent of those people are women. (Interestingly, the tendency for women to have hidden money – presumably emergency funds – lessens as they age.)

And it isn’t debt. Nearly 72 per cent of people hiding finances are in charge of private bank accounts or cash reserves, while 18 per cent had secret debt.

It’s not uncommon for people to get burnt financially by a partner (28 per cent have been). This includes your partner racking up secret credit card debt the other partner was jointly responsible for; forging signatures for loans and HP; stealing from the other person; or financially abusive behaviour such as not paying child support.

So if you’re entering a new relationship or feeling suspicious about your partner’s money management, it’s smart to make sure you don’t end up with STDs (that’s Sexually Transmitted Debts). You can read more about that here. It starts with having honest conversations about money and your financial expectations. And it’s also key to share information with each other – our research shows almost 33 per cent of people would be interested in knowing the credit score of a potential partner. (Don’t worry if yours is bad – only 5 per cent would actually cancel a date if the person’s credit score was in the dirt.)

Finally, who’s better at money management – men or women? It seems there’s a consensus on this: nearly half of women say they’re better at managing money than their partner, but only 40 per cent of men say it’s their strength.

The post Do you know your partner’s credit score? Our research shows that 18% of people have money or finances their partner doesn’t know about appeared first on Credit Simple NZ.

If you’re a married non-smoker with two or three kids and a tertiary degree, pat yourself on the back  –  you’re probably also a high credit scorer to go with it.

We’ve had a look in our data (it was dusty and dark in there, but we survived) and it shows that financially responsible Kiwis are likely to be married, have two or three kids, are university educated, and probably don’t smoke.

Our research of more than 2.2 million people shows that 60 per cent of those living in areas with a high average credit score are married, but those in areas with lower scores tend to be single. In high scoring areas, only 39.8 per cent of people are not married, compared with 53.2 per cent in areas with credit scores that are typically low.

Credit Simple CEO David Scognamiglio says credit providers use credit scores to predict the likelihood of someone being able to pay their bills and married people are more likely to be able to show they’re credit-worthy compared to their non-married counterparts.

“Banks, utility providers, telcos and other credit providers use credit scores as a way to understand the likelihood of someone paying their bills on time,” Mr Scognamiglio says. “People often think having a good credit history is about how much money you have in the bank or how many houses you own, but it’s not. Credit providers are looking for people who have shown that they pay their bills on time and have a lot of stability in their lives.

“When we looked at the attributes of Kiwis who had high credit scores, marriage stood out as a major factor. It seems there’s a level of stability that comes from married life and that’s reflected in the credit scores of these couples. Credit scores favour those who move less, haven’t defaulted on a bill in the past five years and don’t apply for multiple forms of credit in a short space of time – all of this paints a picture of reliability, and married people are more likely to tick many of these boxes, resulting in higher credit scores.

“Marriage isn’t the only attribute of Kiwis with high credit scores – having two to three children seems to be the magic number for maintaining credit health, but having more than three, or one or no kids, means you’re more likely to have a lower credit score.

“There’s also a link between university education and having a good score. People in high scoring areas are more likely to have education qualifications, and a higher proportion with honours, masters and doctorates. And our data, overlaid with census data, shows that areas with higher credit scores are more likely to have a high proportion of professionals and managers, while lower scoring areas have more laborers, machine operators and drivers.

“Finally, smoking is not only bad for your health, but probably drags down your credit score – we found only 7.5% of those living in high-scoring areas are smokers, compared to 15.5% in low-scoring areas.”

Some factors that impact your credit score include:

●  Moving a lot: People who change address often are statistically more likely to miss loan repayments. Putting down roots is way of lifting your credit score.

●  Applying for lots of credit: Applications for debt are added to credit files, even if the credit isn’t used. Multiple applications can be a sign of a person in financial distress who is less likely to make repayments.

●  Aliases: They’re not just for spies. Ordinary people may go by several names, such as a maiden name and married name. It’s a warning sign for lenders. Stick to the same name when applying for credit to boost your score.

●  Errors and disputed defaults: Credit files are compiled using information from lenders like banks and phone and power companies. Sometimes the data is incorrect or you may have an old unpaid debt you’ve forgotten about. Get these cleared up and your score will improve in time.

You can find out your credit score and see if it matches your lifestyle factors or whether you buck the trend right here at www.creditsimple.co.nz.

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