Compare and apply for rewards, low-interest, balance transfer, $0 annual fee credit cards and more.
Finder’s free service makes comparing credit cards simple. Someone new to the world of credit cards may find the varieties offered in the market mind-boggling. Here’s a comprehensive guide from Finder to help you navigate your choices and understand the features and fees that come with this convenient source of credit.
Compare New Zealand credit cards for 2019
Move your high interest debts to a low or 0% interest balance transfer credit card and pay off your debts faster.
No annual fee
Whether it’s a promotional offer or for the life of the card, save on yearly credit card costs with a $0 annual fee credit card.
Earn Rewards Points
Earn reward points as you spend and maximise the prizes and perks you can redeem with a rewards credit card.
Compare frequent flyer credit cards to earn points on everyday purchases to redeem for your next holiday with your favourite airline.
Enjoy a 0% p.a. promotional period, pay no annual fee for the first year or receive bonus points with a credit card introductory offer.
How credit cards work
A credit card is an unsecured revolving line of credit, which basically means you can borrow money to make purchases without having to put up collateral (upfront cash). Based on your perceived ability to make repayments, credit card companies assign a credit limit, which is the maximum amount of money you can borrow.
Unlike a debit card that uses your own money to make purchases, when you use a credit card, it is the lender who pays the retailer. At the end of your billing cycle, you receive a statement and that tells you the total amount you owe the lender for that period. Credit card companies make money on fees and the interest that accrues on your revolving credit.
There are many types of credit cards depending on the type of user. They range from general purpose cards issued by big banks, to brand-specific rewards cards.
Credit card companies have been offering increasingly shiny rewards, signup bonuses, and travel perks to lure new users to spend with them. This can be very helpful if you pay your bills on time and in full. If you don’t you might offset any rewards gained by paying more in fees and interest.
How credit card interest works
As you spend on your credit card, your debts will also begin to collect interest if you’re unable to pay the whole balance back by the end of the statement or interest-free period.
A card might have different interest rates for different uses.
If you’ve used your card for purchases, it will start collecting interest charges at the “purchase rate.” If you’ve used your card for an ATM withdrawal or any other transaction that’s considered a cash advance, you’ll accrue the “cash advance rate” which can be higher.
If you decide to transfer your debt from one card to another you’ll also accrue a “balance transfer interest rate”, which is usually the same as either the interest rate or cash advance rate. However, some cards do offer 0% promotional periods on purchases and balance transfers, so this is something to keep in mind during your comparison.
Each month, you’ll receive a statement that will detail the transactions you’ve made, the total outstanding balance you have and any interest you’re accruing. While you’re only required to pay a minimum repayment each month it’s best to pay as much as you can. If you pay your entire balance in full, you can usually take advantage of up to 55 interest-free days in the next statement period. If you don’t pay your entire balance in full, the remainder will start to collect interest. If you miss the minimum repayment, you could be charged late payment fees.
Comparing credit card features
Most popular credit card features
You can consolidate an existing debt at a lower interest rate with a balance transfer card.
- Manage your debt. The longer the low or 0% balance transfer APR lasts, the more you can save.
- Beware of the revert rate. When the introductory low or 0% interest rate ends, you could find yourself confronted with a much higher interest rate.
A rewards card can be a worthwhile way to get something back from your spending. Whether you’re a frequent flyer, loyal customer or big grocery spender, you can find a rewards credit card to suit almost any lifestyle.
- The major draw of this type of card is earning points that can be redeemed for rewards. Depending on the card you use and the promotions in place, you may be able to earn bonus points when making certain types of purchases or shopping with a particular retailer.
- What you can redeem your points for will vary from card to card. Some allow you to redeem points for flight rewards as well as shopping or travel vouchers. Others can be used for cash back, to redeem merchandise or even to donate to charity.
Cards with 0% APR
If you’re looking for a card that can lead to significant savings on interest, a 0% APR credit card could be the right choice for you.
- 0% APR credit cards allow cardholders to take their time when paying off larger purchases or consolidating existing debt.
- If the 0% APR is only in place for an introductory period, the revert rate could be significantly higher. These cards often require applicants to have a good credit history as well.
Cards with low interest
A low interest credit card allows cardholders to repay their debts at lower interest rates than a standard card. Depending on the card, the length of the low interest period may vary from an introductory period to the life of the card.
- If you struggle to repay your balance each month, low interest cards can help you reduce the costs of your card.
- The advantage of low interest usually comes at the cost of forfeiting the extra features that a premium or platinum card may offer, such as a rewards program, complimentary rental car insurance or other perks.
Cards with no annual fee
A no annual fee card doesn’t charge a yearly fee. Some cards have this as an ongoing deal; others will waive the standard fee for the first year of using the card.
- Not having to pay an annual fee can result in savings each year.
- If the annual fee is only in place for a promotional period, there may be a high annual fee when it reverts to the standard rate.
What are the costs of a credit card?
- Repayments. You’re required to make the minimum repayment when your statement is issued. The minimum repayment is usually 2% of your outstanding balance. You will pay a late payment fee if you don’t make the minimum repayment by the statement due date.
- Annual fee. This is the cost to own a credit card. The annual fee ranges from $0 to hundreds of dollars depending on the credit card type.
- Interest rates. Interest is the price you pay to borrow money. Credit card interest rates are much higher than other types of finance because credit cards are an unsecured product; financial institutions have no recourse to take your assets if you default on your repayments.
- Other fees. Other fees you may run into include late payment fees, rewards program membership fees and cash advance fees.
Credit card application tips
While applying for a credit card doesn’t have to be complicated, it can come with certain risks.
- Assess your needs. Before you begin your search, spend some time considering what you want, need and can afford with your next credit card.
- Compare your options. Once you’ve decided what type of card you want, it’s time to begin comparing your options.
- Are you eligible? Know the requirements for the card application – do you need a minimum income, and do you meet the age limit?
- Know your credit history. It can be a good idea to request a free copy of your credit report before applying, so you can correct any possible errors on it and see what the bank will be seeing when they assess your application.
- Lower your credit utilization ratio. If you already have a credit card balance, it’s wise to pay off your existing balances before submitting a new credit card application.
- Don’t apply for multiple cards at once or within a short period. You may be tempted to apply for a second card just in case your first one doesn’t get approved, but don’t. Each credit enquiry that a lender makes about your credit history leaves a new mark on your credit file for five years.