People are getting smarter at managing credit cards, according to a leading New Zealand bank - but our combined credit card debt will still balloon out by about $100m after Christmas 2016.

It's no surprise Christmas is when credit card spending spikes. It's also the reason Westpac has introduced a 1.99 per cent per annum interest for 12 months balance transfer offer - so Kiwis can manage debt at a much lower rate (

But Shane Howell, the bank's Chief Product Officer, says credit card rollover balances (the amount of debt cardholders pay off over time) have been staying more or less level in recent years, demonstrating better management of the little plastic cards which can otherwise pack a punch to the pay packet.

"All in all, total spending by New Zealanders is up by 5 per cent in the past year to November," he says. "If you look at spending by credit cards, it has increased by about $280m year on year to November - up around 10 per cent.


"However, despite this, the balances consumers leave on their cards have risen by only 2 per cent, showing more people are generally paying off their balances each month."

That spend has shown a large jump in two categories - an 8 per cent increase on items like food, beverages and hospitality. There has also been increased spending on durable items like furniture and whiteware.

"That shows people are still sinking money into their property," says Howell. "At the same time, the food and beverage figure shows the relative confidence people have in the economy and the increasing interest Kiwis take in the restaurants, bars and cafes scene - they seem to be going up everywhere and are well patronised.

"And you can't turn on a TV channel without seeing a cooking show these days."

Low interest rates, New Zealand's population growth, a buoyant housing market and an improving employment and labour scene are among reasons for the increased spend. In Auckland in particular, house prices may have contributed to non-credit-card spending as the value of dwellings rose, with some owners borrowing against the increased capital value.

"People use a lot of different tools these days - some put it on the mortgage, or take a personal loan, others use credit cards but link them to frequent flyer and reward programmes where you can get more bang for your buck. There's also the bank of mum and dad.

"But the fact rollover balances are staying pretty flat tells me people are getting more sophisticated with their credit cards; more is being spent but they are getting smarter with their money."

More people appreciate these days, he says, paying off balances in full not only rids the cardholder of debt, it also allows them to enjoy up to 55 days interest-free if the balance is paid off by the end of the billing period.


However, Christmas is the major force when it comes to loading up Kiwis' credit cards.

Howell says December usually sees national sales rising by about $1 billion annually from November, with credit card spending rising by about $470m.

"A lot of it is Christmas presents, of course, and holidays and entertainment but people also buy big-ticket items like furnishing and whiteware and that new dishwasher. But the debt that gets held on credit cards is about 10 per cent of that $1b spend - so $100m.

"That tells me people are handling their credit card debt better."

Stats NZ figures show over the last five years (2011-2016) annual spend on credit cards rising from $25.9 billion in 2011 to $33.3 billion this year - and the latter figure does not include the figures for December. Even without that, it is a 28 per cent rise in five years.

"It is a big number but don't forget it's a big time period too," says Howell, "and people have more capacity to spend than five years ago."

The Stats NZ figures show a small but steady increase in December credit card spending over the years 2010-2015 - from a 3 per cent year-on-year increase in 2011-2012 to an 8.6 per cent rise (2012-2013) before a 10.4 per cent lift in December 2015 over December 2014.

Howell expects this year's increase to be similar - around another 10 per cent. He says it takes, on average, 6-9 months for most people to pay off the debt incurred in the holiday period. That is also why Westpac have introduced the balance transfer offer.

It allows new and existing customers to transfer outstanding balances on hire purchases, personal loans, other bank and store credit cards (some finance cards can have interest rates of up to 21 per cent) to a Westpac credit card and pay only 1.99 per cent per annum for 12 months on the balances transferred. Lending criteria applies to the Westpac Balance Transfer.

A balance transfer calculator ( demonstrates savings that can be made.

"It simply gives people more control over their debt," says Howell. "You will typically see retailers driving a lot of spending over the Christmas period - and this is a way to get on top of your debt."

Westpac and ZM are also holding a competition where four people can win $5000 each to help 'Pay Back Summer'. Click here for more information.
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