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18 Sep 2025 15:25
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  •   Home > News > Business > Features > Personal Finance

    Wise up to clear credit card debt

    While Kiwis’ attitudes towards consumer debt have become healthier in recent years, interest on credit cards is still costing some New Zealanders dearly.


    In total we pay around $650 million in interest on our credit cards each year. For a population our size that’s a big interest bill. Imagine how much better off we would be if that $650 million was in our own bank accounts, going towards achieving our own goals.

    The good news is that Kiwis are waking up to the fact that high interest consumer debt is dumb debt. Reserve Bank figures show consumer debt is declining and recent Nielsen research shows Kiwis’ attitudes towards debt have changed as well. The research found 56% of New Zealanders are less inclined to take on debt since the recession, and over the next 12 months 26% intend to change the way they manage their debt.

    But while our intentions are good – it’s clear we have a little way to go before our debt is under control.

    Credit cards can be a great way to pay if they are used wisely – that means paying them off in full within the interest-free period. One way to control this is to reduce the credit limit you have to one you can afford to pay back each month.

    While credit card statements show that only a minimum payment is required, don’t take this as the amount you should repay. The minimum may be as little as 2% of the outstanding balance so paying just this will mean interest rapidly adds up on the remaining balance. It grows quickly because the interest rate is high – around 18% on average.

    At the recent Financial Literacy Summit in Wellington, Retirement Commissioner Diana Crossan challenged financial institutions to include more information on credit card statements showing consumers how long it will take them to repay their credit card debt and the total interest they will be charged if they only pay the minimum due.

    Until lenders provide this information, it’s a good idea to wise up. Use the Credit card calculator on sorted.org.nz to see how different repayments can affect the total interest you pay and how long it takes to clear your credit card debt. Once you see the impact, you’ll see you’ll have more money to use as you wish if you pay your credit card off in full each month.

    © 2025 sorted.org.nz, NZCity

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