Greek Debt Crisis 101 with Tony Alexander

In a special Q+A, BNZ Chief Economist Tony Alexander explains how Greece got itself into so much debt, how the issue is likely to be resolved, and whether there will be a flow-on effect to the New Zealand economy. Next week, China.

How did Greece get itself into this situation?
Greece borrowed too much money during the 2000s and ahead of the global financial crisis, and they didn’t invest it wisely. They grew the public service too much, introduced generous social welfare payments – especially for pensioners, and they regulated their economy to the point where it’s no longer competitive against other economies. Now, Greece has an economy that is unable to support its level of debt. Continue reading…

The journey to being credit card debt free

Many of us tend to live in denial when it comes to credit card debt, so if you find yourself scraping to make the minimum repayments each month and generally going nowhere, it’s time to face up to debt.

Plan your approach

If you’re serious about wiping out that credit card, you’ll need to do a few things. First, eliminate the spending habits that created the debt. Then make a plan for the money you have coming in. Next devise a strategy to pay off the debt, and finally, introduce ways of being good with money so that you avoid slipping back into old ways.

Eliminate the negative

Getting control over your debt means understanding how and why you got there in the first place. To do this, you need to take an honest look at your spending habits and identify places where you can stem the flow of money out of your accounts. You’ll need to be brutally honest and ready to make sacrifices in order to free up money that can be funneled toward the debt. The best way to do this is to create a budget which will become your blueprint for the future.

Cut interest costs

When it comes to interest, the longer you have a debt, the greater the cost; and that’s money that would be better off paying down your debt. So get smart about it, study up on the cost of borrowing and minimse your interest costs.

One way of doing this is to shop around and find the lowest credit card interest rate you can. Chances are your bank will have a low rate card that you simply don’t know about. Talk to your bank, let them know what you’re trying to achieve and get some expert input.

Find a strategy that suits

Paying down debt can be a personal thing that means finding a strategy that works best for you. For instance, if there are multiple debts involved, some people prefer to tackle the larger amounts that carry the highest interest costs first. Others might find success by knocking off the smallest debt first to get a few quick wins under the belt.


If it all seems too much, a debt consolidation loan can be a good way of condensing many debts into a single, easier to manage loan. This tactic helps by creating a degree of certainty around your monthly costs. A personal loan typically has a set term of a few years with repayments that are the same each month. This makes budgeting easier since you know exactly what’s coming up. If you already have a personal loan or a home loan, check up on some of the many options on offer from your bank as there may be a more cost effective option for you.

Balance transfers

Another way to accelerate paying off your card is a balance transfer — these offer an even better deal on interest costs, albeit over a shorter period. Most deals will have a special rate for 6 to 12 months on the transferred debt before reverting to the standard interest rate. If you’re able to pay more in a shorter period of time (and are disciplined enough to not spend on the card at the same time), this can save you plenty in interest charges.

Staying debt free

When the end is in sight, it’s time to think about how you can stay debt free. Start by lowering your card’s limit to something more manageable — while you’re at it, tell your bank you don’t want to be offered credit limit increases unless you ask for them. Pay your card off in full at the end of each month to avoid interest altogether and don’t use your credit card to withdraw cash as this attracts a higher rate of interest that starts accumulating from day one.

Trying to get on top of your credit card debt? Visit our calculator to see how much you could save with a balance transfer and find more information or apply for one.

Young Money: Own it, don’t loan it

One of a series of blogs from real people sharing real experiences, observations and advice about being good with money. 

Simon Palfrey is a 22-year-old student at Massey University in Auckland. He is studying towards a degree in Communications majoring in Public Relations and Journalism. Simon currently works in the health and safety sector and enjoys sport and spending time with family and friends in his spare time. Continue reading…

Take control of your credit card

As useful as credit cards are, they can be an all too easy way to rack up debt if you’re not disciplined. In fact, according to the Reserve Bank, New Zealanders had some $6.3 billion of debt sitting on their credit cards as of January 2015. So just how do you go about keeping your credit card debt manageable? Continue reading…

Is it always better to pay off debt before saving?

It’s fair to say that being in debt is no fun, and paying it off, no matter the amount is a great feeling. The faster you can pay debt off, the less interest you’ll pay and the better off you’ll be.

But what if you want savings on the side for a new appliance, a holiday or emergencies? Are you better off paying down the debt completely before saving, or is there a smart way to do both and still end up on top? Continue reading…

Traps for Young Players: How not to use your credit card

When used wisely, a credit card can be a useful tool for managing your cash flow. However, it can be all too easy to slip into bad habits that lead to over-spending and debt. Falling victim to this is easier than you might think, so we’ve made a list of some traps for young players that will hopefully get you thinking about how you can stay in the black. Continue reading…

The Low Down: How to improve your credit score

Even if you have a spotless record of repaying debt, anyone who’s ever applied for a credit card, home loan, phone plan or hire purchase agreement will know the vaguely anxious feeling that stirs in your chest when you hear the words “I’ll just have to run a credit check.” Continue reading…

Weighing up the balance: Balance transfers and you

If you’re one of the many kiwis giving their credit card a good workout at the moment, receiving your next credit card statement could be a bit of a shock.

Reserve Bank statistics suggest that most New Zealanders run up credit card debt that’s costing them interest each month at an average rate of 18.95% – 20.95% per annum (p.a.).

To counter this, you may notice come banks promoting offers known as ‘balance transfers’ that promise low, or even 0% p.a interest on existing credit card balances.

What is a balance transfer?

A balance transfer is when a person with a credit card debt with one (or multiple) providers (like a bank, or store that offers credit) transfers that debt to another provider. Credit providers usually offer lower rates of interest for a set period of time in exchange for you transferring your debt to them.

For example, BNZ is offering 0% per annum (p.a.) to customers who transfer their credit card balance, which means that if you transfer the balance of your credit card from another bank to BNZ, you’ll pay no interest on that debt for 12 months (provided you comply with the Card terms and conditions, including by paying the minimum repayment each month).

This 0% rate only applies to the balance you transfer to the credit card, and the standard purchase interest rate will be charged on any purchases you make with the credit card.

The set period of time for the low balance transfer rate is particularly important to note. The 0% rate offer is not permanent, so if you do a balance transfer you should also put a plan in place to make the most of it. It gives you a window of opportunity to focus on paying off the balance, instead of paying off the balance plus interest.

A balance transfer can also be good if you have a number of credit cards, because you can consolidate that debt, making payments easier to manage, so you don’t miss them and incur late payment fees.

So, what’s in it for the bank?

Banks use balance transfer offers to attract new customers. If your balance transfer was worth $2000 and your new credit card had a limit of $3000, you would still theoretically have $1000 available to use for purchases. However, purchases made with that $1000 would incur interest at the usual rate for purchases (for example, if you had a card where the usual rate of interest for purchases was 19.95% and you transferred $2000 and then spent the remaining $1000, you would incur interest of 19.95% p.a. on the$1000 worth of purchases, but 0% p.a. interest on the initial $2000 balance that you transferred).

Working toward a zero balance is the best way to be good with credit cards.

Ideally, the best way to manage credit cards is paying the full balance off monthly so you never have to pay a cent in interest, but you can still reap all the benefits of having a card, like rewards, security and convenience.

A 0% p.a. balance transfer for 12 months could be a good way to get stuck into paying off your credit card balance.

BNZ terms and fees apply. 

Visit our calculator to see how much you could save with a balance transfer, and find out how to apply for one here.

Continue reading…