The Great Credit Card Hunt
Jun 19, 2016
Recently I’ve been doing some helping out at a friends business whilst they take a well earned break. It’s been a blast and I have immensely enjoyed doing some completely different work to what I would normally do. I’m working in a busy automotive workshop doing all manner of paper related things. Swinging the spanners is definitely not my forte so I’m happy to stay in the very warm office and answer phones, accept payments, update data bases and natter with my temporary colleagues.
Customers do what the owners love them to do. Pay for the services that are provided in a timely fashion. What I’ve noticed though is that a huge number pay using direct debit, eftpos (debit card) and many still write cheques. I would estimate that 9/10 pay this way. This is all well and good, money is transferred from their account to the owner's in an instant (or longer in the case of cheques). But far fewer people pay using a credit card and for a couple of reasons I think that by not using a credit card they are missing out.
Last month my family booked an overseas trip. How did we pay? All on our credit card of course. Don’t be alarmed, I don’t call myself The Happy Saver for nothing. I will be paying my card off on the payment date and so far I have never incurred one cent of interest on a credit card. Paying by credit comes with several advantages.
The PROS:
By purchasing on your card you are now covered for travel insurance if you are taking a trip overseas. Most credit cards offer this insurance as a perk. This is a big bonus, saving us $400 - $500.
You also get to keep the money actually in your interest earning account for another 35 - 55 days (or until the card is due to be paid off). Using the bank’s money instead of your own. And whereas usually when you use someone else’s money you have to pay for the privilege with interest, you pay it off before incurring any at all. Banks probably don’t like us very much for this!
Everyone understands Fly Buys right? Credit card loyalty schemes are similar. You earn points or cash back for every dollar that you rack up on your card. You can use these points to buy items from glossy brochures that the bank sends in the post. I am not interested in any of this, I don’t need more stuff. So, we always use these points/cash back to contribute towards travel.
Every purchase goes on the card. That’s from a single postage stamp to a holiday. So, for all the things you were going to buy anyway you can earn points or cash rewards, which in our case we then convert into flights to go somewhere fantastic. I cashed in a stash of points towards this trip and managed to put $280 back in our bank. That is free money right there. I never would have received this if I paid by cheque ya’ll.
You can load up the card with cash before travelling and therefore use your own money and not draw out cash on the card (which can get very/extremely expensive with interest and transaction fees charged by your loving bank).
The CONS:
You pay an annual fee for your card, plus an additional charge to have a spouse linked to it. In the past I’ve managed to negotiate these fees down, or away entirely, quite successfully but you can expect to pay between $100 - $180 year (or much much more if you are going for the high roller fancy pants cards which are aimed at high spenders). Even with this it’s STILL worth it in my book.
The astute amongst you will be aware that you get charged a ‘convenience fee’ when booking things such as flights through an agent. Yes, we paid an additional 2% fee but it still made sense to use the credit card as this would ensure our travel insurance was taken care of. Plus we earned points for the transaction of course...
If you do not pay your card off on time you will be charged exorbitant interest rates. These vary a great deal but in the case of our card are 18% - 23%. I don’t incur interest. Ever. We always pay our card off in full on the due date.
Talking to banks is hard work! Banks do a brilliant job of making it difficult to compare their offering with other banks and in the conversations I had with them they are pretty staged in the advice they give as “they are not investment advisors”. I got that response when asking “what’s better: Fly Buys or Cash Rewards?”. Really! You are a freaking bank and you can’t tell me?!
You can have several cards, banks will hand them out like lollies. BUT, we have only one card with a major bank. My husband and I have a card each that is for the same account. In my mind I wonder what the point of spreading my spending over several cards would be, I’ll just dilute the rewards earned from each.
So, why doesn’t everyone use a credit card? I have of course been asking around and it surprised me how few of my friends do use them. It turns out that it comes down to trust. “I don’t trust banks either” I thought to myself. But I was wrong. They did not trust themselves to use a card wisely. They were all convinced it would be a complete disaster with them maxing out their card and then taking the extra credit that the bank invariably offered them and maxing that out as well. It is a fascinating insight into human behaviour.
If you don’t have the willpower and strength to resist all the money the bank will offer to lend you then you are in deep deep doo doo. Listen to any person with financial woes and credit card debt will be amongst their consumer debt. The people I spoke to were financially savvy enough to know their own limits and that cheques, eftpos and direct debits were the way for them to pay. That way if they didn’t have the money, they don’t get to buy the stuff. If I felt that I could not be disciplined enough to use one wisely, I would give it up immediately.
Being a big podcast listener and blog reader I’ve been envious of those people who manage to travel around the world on air points as they have learned the tips and tricks of every single loyalty scheme. Alas those options are just not available to us in little New Zealand with its small population, small pool of banks and the fact I endeavour to be a small spender, but despite this I’ll still be endeavoring to get the best deal going with my card.
At the moment I’m reviewing the card that we use as there are better options out now. We have had this particular card for years but I’ve noticed lately that the banks are offering all sorts of sign up bonuses such as double points, cash back when you spend over a certain amount, better dollars to points ratios, concierge services and Koru membership discounts. I must admit that I should have reviewed this much earlier (and I’m now kicking myself for missing out on free money).
The hunt for a new card begins…
I won’t just go with the bank I currently use as they may not be providing the best deals. I’ll shop around everyone first. I will also be sure to point out to each bank that I’m looking at others, in my experience that keeps them pretty honest (ish) and I get a better deal.
Here is how you can go about finding the best deal on the market:
I visited www.canstar.co.nz/credit-card-rewards and instantly got a feel for what cards are available to me based on this criteria:
Chasing rewards
Pay off each month
Your criteria may be different e.g Flybuys might be important to you instead of cash back.
With a short-list of four different bank websites (ANZ, BNZ, Westpac and Kiwibank) I drew up a list of what they all offered so I could make a comparison. Just to round out my research I also took a quick look at all other banks but dismissed them.
Then, I happened to be downtown so I visited those banks and asked them if there was anything further I should know about. I literally had my list with me and was comparing as I spoke with the bank. I received many comments of “you are very well organised…” No harm in them seeing that I’m shopping around. This was a worthwhile exercise as ANZ pointed out that they were waiving the account fee of $175 for the first year. I did not spot this when I was surfing their website at home.
After visiting each bank I did not feel confident that they knew what they were selling, i.e. the teller was potentially not fully trained in all the ins and outs of credit cards. So I then I PHONED the credit card department of each bank and said the following:
I am after the best rewards scheme that gives me AirNZ flights
I pay my card off in full each month
What promotions are you running at the moment?
I kept updating my list.
My comparison list. Click on image to enlarge.
After these conversations I ruled out Westpac and Kiwibank. A side note here. Years ago I read an article about how women are less likely to get a good deal from their banks when compared to men. Women were more likely to just keep banking with the same bank they had used and were less likely to shop around for a better rate. When I visited Westpac with the questions on my list it became clear that they could not match the BNZ deal but the teller did point out that “I get to come in and see their lovely smiling faces” if I continue banking with them. Ladies, let me be clear, if you want to be a good saver the teller should be at the bottom of the list of what is required from your bank. Service is important but come on!
It was then down to ANZ and BNZ.
BNZ were already offering a better deal with:
Double rewards for six months from sign up
Bonus of $150 cash back if I spend $12K in a 12 month period (I will)
BUT they had an account fee of $155. I politely asked if they would waive this fee as ANZ are waiving their fee. The good news is that “any fee can be waived at the bankers discretion”. I take that as a YES!
ANZ was offering great discounts for Koru membership but that is not important to us, we would far rather chase cash rewards.
I made an appointment with BNZ with a view of signing up to the BNZ Advantage Visa Platinum card as long as they waived the fee. I would normally do this online but thought I would have a go at face to face. The banking advisor I met said in regards to the waived fee he would "need to escalate this to a more senior person". "Do what you need to do" I said. I now have an appointment early next week to fully sign up BUT only if the fee is waived. They will ;-)
This is the offer:
Account fee of $155 waived
$75 spend = $1 cash reward
Concierge service
Foreign currency service fee of 2.25% of the transaction (in NZ dollars) when you purchases things and make cash withdrawals in foreign currency
90 day travel insurance (an improvement on our current 30 day)
Double rewards for six months
Spend $12K in 12 months and get bonus of $150
Other points that I won’t bore you with!
Once this card is up and running I’ll transition to it and close our existing card once we have taken our trip overseas. Its super important to make sure all of your payments etc are working with the new card before stopping the old one.
A final Con. Or is it a Pro?
I discovered something during this entire exercise. Shopping around has become a bit addictive. In hindsight, is it a little over the top to research online, visit the bank and THEN phone them as well? Heck no! If a few hours of research (which I enjoy) results in hundreds of dollars in my bank account (free money), meaning a few hours less in the workforce, then I consider it worthwhile and entertaining to boot!
Some interesting stuff for reading and listening to:
Mr and Mrs Pop are chasing the rewards and their blog is an interesting insight into how things work in the U.S. I can feel their pain as working out the differences between banks can get super confusing:
www.plantingourpennies.com/crazy-calculus-credit-card-churning
If you want to know how credit cards all began check out this Podcast:
www.99percentinvisible.org/episode/the-fresno-drop
Great podcast here. Scroll down to the Credit card section:
www.frugalwoods.com/2014/09/15/how-we-manage-our-household-finances
Happy Saving!
Ruth
Since writing this blog post I have heard from Zan. He has created a New Zealand credit card comparison website that he thought you and I might find useful. When I wrote this posts I was unaware of this site but having now looked through it, I found it is pretty good. If you are on the hunt for a card go and check it out: www.creditcardscompare.co.nz
