Cut the card: 5 ways Kiwis are reducing credit card debt

Posted: 25 January 2023 11:58 am
Credit card debt_GettyImages_1800x1000

Lingering debt is weighing on Kiwis, according to new research from global comparison site Finder.

A nationally representative survey of 716 credit-card-using Kiwis revealed it will take 1 in 5 (19%) Kiwis up to 6 months to pay off their credit card debt.

The research found a further 7% will need from 6–12 months to settle their debt.

Almost 1 in 10 (9%) will take up to 2 years to become debt free, while a concerning 6% admit they don’t think they’ll ever be able to pay off their credit.

Angus Kidman, Finder’s editor at large in New Zealand, said many Kiwis are turning to credit cards as they struggle to cope with the rising cost of living.

“The ease of access to credit cards in New Zealand combined with the rising cost of living has made them a tempting option. Now many are struggling to pay off their credit card balances each month.

“Many credit card companies offer low introductory rates and even rewards programs that tempt consumers, but they also make it easy to rack up debt.

“As expenses continue to rise and interest rates increase, things are only set to get worse.”

In order to manage their credit card spending, 64% of Kiwis are putting plans in place to stay on top of their budget.

Some (32%) have set spending limits on their card, while others (12%) have an “out of sight, out of mind” approach to reduce their spending.

Just over 1 in 10 (11%) have set alerts for when their payment due date is approaching to avoid any late fees, while 8% have set an alert for when they are approaching their credit limit to avoid overspending.

Some have even taken to cutting up their cards (6%) to avoid spending entirely.

Kidman said there are several ways to deal with credit card debt and regain financial stability.

“By understanding where your money is going each month, you can identify areas where you can cut back on expenses and redirect that money towards paying off your credit card debt.

“Creating a budget can help you prioritise your spending, so you can make sure that essential expenses, such as rent and groceries, are taken care of before you pay for non-essential items.”

Nearly 1 in 10 (9%) plan to take out a balance transfer credit card to manage their debt, while 6% have already done so.

Kidman said consolidating your debt can help you save money on interest charges and make it easier to keep track of your payments.

“There are balance transfer credit cards that offer 0% or a low-interest rate on the transferred balance. That means you can concentrate on paying off that debt.

“Credit card debt can be overwhelming, but it is not insurmountable. By taking the necessary steps to reduce spending and consolidate debt, you can regain control of your finances and break the cycle of debt,” Kidman said.

How long will it take you to pay off your credit card debt?
1–3 months11%
3–6 months8%
6–12 months7%
I don’t think I’ll ever be able to pay it off6%
Less than 1 month58%
Up to 2 years9%
Source: Finder survey of 716 Kiwis with a credit card, November 2022
Do you plan to take out a balance transfer credit card?
I’ve recently done a balance transfer6%
Yes, I plan to9%
I don’t know what this is17%
Source: Finder survey of 716 Kiwis with a credit card, November 2022
What are you doing to manage your credit card spending?
I’m not doing anything to manage my spending35%
Set spending limits on my card32%
Keep my card out of sight12%
Set alerts if my payment due date is approaching11%
Set alerts if I approach my credit limit8%
Unlink my card from my phone3%
Cut up my card6%
Put my card in the freezer in a block of ice3%
I don’t have a credit card1%
Source: Finder survey of 716 Kiwis with a credit card, November 2022

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