Save Interest, Beat Your Bank

Save Interest, Beat Your Bank

Things are expensive at the moment and everyone’s getting a bit gloomy. Petrol is at $2 a litre, interest rates are high, the housing market is looking shaky and even food prices are going up. It’s time to get a little back. The new tax cuts may help you buy an extra block or two of cheese (not Tasty mind you), but now is the ideal time to make savings and keep more cash in your back pocket.

One saving opportunity that has surfaced in the last few weeks is credit card balance transfers. If you are in the unfortunate position of having to fork out hard earned dollars to pay credit card interest, this can ease some of the pain. The banks want your credit card business and they are dangling discounted interest rates in an attempt to get it. The usual offer is 6 months of discounted “honeymoon” rates on your transferred credit card debt. The best of these is currently 5.99% for six months offered by Kiwibank and BNZ. That is a saving of around 15-16% on normal credit card interest rates. Just for swapping over.

So what happens after the honeymoon? If you are still paying off that credit card debt, you want to avoid being rocketed up post honeymoon to the standard credit card rates of 20%+. So when you transfer, the “low rate” credit card option may work better for you. With the low rate card the post honeymoon interest rates range from 12.5% to 14.9%. Alas reality, not as pleasant as the honeymoon, but up to 9.45% lower than standard credit card interest rate pain. Unfortunately there are a few extra “compromises” as part of this relationship. The main one being higher than normal annual credit card charges. They range from $50-$75, so check the numbers to make sure it works out better for you. Kiwibank have the lowest cost option amongst the major banks, available until June 30th. Offering the lowest honeymoon rate of 5.99%, the lowest post honeymoon rate of 13.30% and the lowest yearly fee of $50.

Ok so there are some savings in interest right off the bat. But how can you save even more? The real saving is to pay 0% credit card interest. Use the interest you are saving, plus anything else you can spare and snowball that into a big debt busting monthly payment. That way you can focus on having that card cleared in 6 months. If after clearing that debt you can stay away from credit card interest, you have beaten the bank. No more money going on interest, meaning more in your back pocket. To make sure you don’t jump back into another painful interest paying affair, applying a swift end to your physical relationship with Mr Credit Cardo may be a good idea!

Cameron Milnes

Cash Control

www.cashcontrol.co.nz

ENDS

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