If you've got the money, there are plenty of other ways to pay for your new set of wheels. Photo / 123RF
OPINION:
Q: I am surprised at the lack of protest at the arbitrary decision of banks to phase out cheques over the next few months. It's no doubt motivated by cutting their costs and increasing already large profits — never mind the inconvenience it will cause their customers.
Personally, in most cases I will be able to pay accounts and make charitable donations through internet banking, but I am limited to a maximum of $10,000 per transaction.
My car will soon need replacing by a new one costing close to $40,000. With a cheque not being an option, and the $10,000 limit well and truly breached, how will I be able to pay for it? I bank with both ANZ and TSB.
Also, I understand that the Reserve Bank licenses the NZ banks to operate in this country. Would they be able to insist the banks continue to issue chequebooks to customers in order to retain their licence?
A: The car purchase solution is easy. At ANZ you can raise your internet banking limit instantly by calling the contact centre. If you're worried about the higher limit, lower it again after you've bought the car.
At TSB, you can't raise the limit, but you can carry out as many transactions as you wish in any one day using two-factor authentication. So presumably you could pay for the car in four transactions.
"Customers can also make in-branch transactions of any amount with proof of identity, or call our contact centre to arrange payments, noting they will need to provide a signed written request for large amounts," says a spokesperson.
On your question about the Reserve Bank: "Cheques are not legal tender, and the provision, writing and acceptance of cheques are at the individual discretion of banks, customers and third parties," says a spokesperson.
"There are banks which continue to offer cheque services, with no plans to discontinue them," he says. As I said two weeks ago, these include SBS and TSB.
"Meanwhile, banks will help customers wanting to make transactions beyond usual online limits — such as for a car purchase — by arrangement.
"The registration and supervision of banks by the Reserve Bank is focused on financial soundness and avoiding the significant damage to the financial system and economy that could result from the failure of a registered bank, and not on customer service offerings."
Q: In your reply two weeks ago about cheques nearing the end of the line, you made a particularly nasty, impractical and mean-spirited comment. "You're going to have to take the bull by the horns and learn another way of paying bills, perhaps on-line. It's not difficult."
Try telling that to a 93-year-old functionally blind man, with benign essential tremor, who has never used a computer and can't see well enough to start. His shaking hand already means that he can't use an ATM and has to get his cash out by using Paywave. He is NOT mentally impaired and doesn't need a person with power of attorney.
One used to be able, if you were a customer, to go to the BNZ and arrange payment of an account into another bank, but even that service has stopped. All banks need to introduce such a service.
But wait, he lives in a village without a bank.
Back to the problem. Cheques work for a lot of people. And having your accounts online greatly increases the chances of fraud.
A: "Nasty, impractical and mean-spirited." Ouch! In my defence, I was replying to a reader who gave no information about his circumstances. I surveyed nine banks and told him their cheque policies. I then concluded it wouldn't work to switch banks, and added the bull horns bit.
I'm not sure it's fair to apply that advice to the man you write about and then get cross with me. And it's certainly not my fault that he faces problems with his banking.
Having said that, I feel for him, and asked Deputy Banking Ombudsman Sarah Parker for some suggestions.
"The decline in the use and acceptance of cheques does have implications for those members of our community who still rely on cheques for paying their bills," she says. "We recommend customers who still rely on cheques talk to their bank about alternative ways to make payments.
"There are a number of options: internet banking is an option for those with access to a computer or smartphone as well as the internet. If not, phone banking, paying bills on the provider's secure website, automatic payments and direct debits provide other alternatives." She adds that banks have obligations under the Code of Banking Practice to do their best to meet the needs of all their customers.
"Banks are also required to follow the NZ Bankers' Association guidelines to help meet the needs of older and disabled customers.
"These guidelines set out that banks should provide user friendly websites, simple screens that support the use of electronic banking by older or disabled customers, easy prompts and access, and plain language information on how to use electronic banking.
"The guidelines also outline that banks will work to help older and disabled customers understand the range of banking products and services available, and how banks can support customers as their needs change." You can read the guidelines at tinyurl.com/GuidelinesNZ.
I hope this information is useful to you.
I also asked Parker about online bank accounts and fraud.
"We do not have any information about whether having accounts online increases the chance of fraud but it does change the nature of the fraud risks.
"Online banking scams, such as when a scammer pretends to be calling from a trusted company and uses remote access to your computer to gain access to your internet banking, continue to occur, and it's critical that customers understand how to protect their banking."
She adds that banks provide an online fraud guarantee. "The Code of Banking Practice obliges banks to reimburse victims of fraud where someone accessed and used their electronic banking or their card without authority, as long as the customer complied with its terms and conditions for electronic banking or card use, took reasonable steps to protect their banking, and wasn't dishonest or negligent.
"Customers should ensure they never give out (or save) their password, or any code from the bank. Customers can also talk to their bank about getting extra protection for their accounts, e.g. two-factor authentication and low transaction limits for online payments."
Q: Following on from the discussion on the son keeping grandma's cheque, the grandma could actually now give her grandson that amount in cash, knowing the cheque would never be deposited.
The value of a cheque in the future? Novelty purposes only, regardless of the amount the cheque was written for, unless there was some provenance behind the cheque, the signature being of value for example. Or a major Lotto prize whereby the cheque was returned from the bank after being cleared etc.
How about my first paycheque, $11.98 for a 40-hour week? No, I didn't keep that, I couldn't spend it fast enough.
A: Less than $12 a week! Exploitation! Well actually it's just inflation, which in the 70s and 80s approached 20 per cent a year.
Thanks for some good advice for grandma — and for her grandson. It seems his hopes shouldn't be too high for his collectible investment.
Q: From my understanding based on the IRD website, your reply last week to the query about PIE tax rates is missing some important details.
Your PIE tax rate (PIR) doesn't rise and fall according to your current annual taxable income. It depends on what you earned in the previous two years.
If you have a big drop in income from above $70,000 to below $48,0000, your PIE investments will still be taxed at 28 per cent even if the rest of your income is taxed 17.5 per cent or 10.5 per cent.
Conversely, if your income rises above $48,000 there will be two years before your PIR rises to 28 per cent. Or have I misunderstood the IRD's website?
And I assume the same rate applies to KiwiSaver as well as PIE term deposits?
A: Last bit first. To my knowledge all KiwiSaver funds are PIE funds. And the same tax rate applies to all PIE funds, including the ones that work like bank term deposits.
On the taxable income totals, you're right. You have to consider your totals in the previous two years. But the good part is you can use the lower of the two totals.
As you say, you're disadvantaged for a year if your income drops a lot. But you get a break for two years if your income rises.
I didn't go into that last week because it wasn't relevant to my point — that there are PIE tax breaks for those on lower incomes too. What I said was already complicated enough for Saturday morning reading!
But the fact that you can use the lower of two taxable income totals is another tax advantage of PIEs.
Q: My husband is 65 years old now, and cheerfully receiving the pension. I'm 61 and not in paid employment. In this situation, for many years past, the wife has been eligible for a reduced pension until she fully qualified at 65.
This is no longer the case, as of November 9.
I thought you might have readers approaching retirement who hadn't been aware of this change.
A: You're quite right. From November 9, people receiving NZ Super will no longer be able to "include" a non-qualifying (usually under 65) partner. But if you already do this, it will continue until the younger partner turns 65 and receives their own Super.
First, though, what's this all about?
Currently a couple with a relatively low income, and only one partner qualifying for Super, can apply for the non-qualifying partner to be included in the qualifying partner's NZ Super payments.
Each person receives the same amount of Super, which is less than the qualifying partner would otherwise have received.
The couple's income must be below $58,371 a year. The lower the income, the more they get. And the way it works out, a couple ends up with more total Super only if their income is less than $30,716.40 (don't you just love these government numbers!).
So why would a couple earning between those two totals want to use this facility? "Some people may choose to receive a reduced payment for a short period to ensure their partner is included before the policy ends," says Kay Read at the Ministry of Social Development. This might happen if the couple expects their income to fall — and therefore their total Super to rise — before the included partner qualifies for Super themselves.
To qualify, "one or both partners can be in employment," says Read. "If there is a regular pattern of work, we generally look at the couple's combined income over the previous 52 weeks."
But if their income is likely to be different in the next year — perhaps they received a lump sum that won't be repeated, or they have reduced working hours or retired — their income can be estimated for the coming 52 weeks.
Couples who want to apply should do so straight away, as it can take several days to process their application. As long as the qualifying partner has applied and the couple qualify before November 9, they won't miss out if there are any processing delays.
"We encourage anyone in need of further assistance relating to these changes to get in touch with us. We can discuss their situation and provide further advice based on their individual circumstances," says Read.
The change isn't expected to leave people in the lurch. After November 9, the younger partner "will be able to apply for other kinds of assistance, for example, Jobseeker Support, Supported Living Payment or an Emergency Benefit," she says.
There's also another NZ Super change from November 9, and it's one that will bring a few smiles.
Currently some people's Super payments are reduced if their spouse or partner gets an overseas pension. That reduction will end for most people. "This recognises you as an individual with your own entitlement to superannuation," says Work and Income. Applause!
- Mary Holm, ONZM, is a freelance journalist, a seminar presenter and a bestselling author on personal finance. She is a director of Financial Services Complaints Ltd (FSCL) and a former director of the Financial Markets Authority. Her opinions are personal, and do not reflect the position of any organisation in which she holds office. Mary's advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it. Send questions to mary@maryholm.com. Letters should not exceed 200 words. We won't publish your name. Please provide a (preferably daytime) phone number. Unfortunately, Mary cannot answer all questions, correspond directly with readers, or give financial advice.
OPINION: The big challenges for the country are not going away.