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Christmas finance offers dress up danger as opportunity


Flyers arriving in mailboxes encouraging Kiwis to “entertain now, pay later” are fuelling the pressure to spend at Christmas, even if it means racking up debt.

Peter Cordtz, Head of Community Programmes at the Commission for Financial Capability (CFFC), says a worrying trend in the latest mail drops is that they’re not from loan sharks but from reputable New Zealand brands that market to families.

The flyers advertise 90 days’ credit on finance cards at no interest and with no payments required, and loop in other retailers commonly visited for Christmas entertaining supplies.

Once that 90 days is up, the finance card’s interest rate of 25.5% kicks in – more than the interest charged by most credit cards of around 18%.

“These retailers are dressing up danger as opportunity,” says Cordtz. “In three months’ time those families would have had to fork out for back to school costs, and still be faced with paying off Christmas dinner.”

CFFC research shows that one in four New Zealanders felt pressure from their family or community to spend more on Christmas than they would like to, and those who felt it the most were also the least likely to be able to afford going into debt. Among those who identified as “sinking badly” financially, 32% felt pressure to spend more than they wanted to. Younger people aged 18-34, Māori and Pasifika were also particularly vulnerable.

The research also highlighted that 40% of Kiwis thought they spent less on gifts than others, a mindset that could also fuel overspending by buying gifts on credit to match what they thought friends and family were spending.

"We encourage everyone to talk with their whānau about their long-term goals for 2019, and how Christmas 2018 fits in as just part of that," said Cordtz. "Don't go without, but talk to your family about what's reasonable to spend so you and your loved ones don’t fall into high-interest debt, and everyone has a stress-free platform on which to enter the new year."

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