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17 Jan 2017

Dealing with your Christmas Spending

Kiwis spent big once again this holidays, with the Paymark EFTPOS network recording $5.9 billion worth of sales during December. With figures already looking healthy, a last-minute spending spree kept retailers especially busy, including an estimated $5 million worth of transactions on Christmas Eve alone. While more spending in December was undertaken using EFTPOS/debit cards at $3,117.1 million, credit card spending still accounted for $2,819.8 million of the total. With the holidays now over and most people back at work, people are being advised to manage their Christmas debt sooner rather than later.

The retail industry in New Zealand was strong throughout 2016, with spending noticeably higher in the regions. While December spending was up by just 0.1 percent compared to November and Boxing Day spending was subdued, there was still a significant 6.6 percent jump in December spending compared to the previous year. Annual spending increased by 6.7 percent for the calendar year, or 7.9 percent excluding spending at service stations. Supermarkets, food and beverages, and fuel saw the most money in 2016, with accommodation the fastest growing sector with 18.5 percent of total spending. 

Hawke's Bay experienced the biggest jump in spending during December with a 10.9 percent increase, followed by the Bay of Plenty with a 9.9 percent increase, Otago up 9.5 percent, and Palmerston North up 9 percent. Auckland/Northland recorded a 6.4 percent rise in spending, with Wellington slightly higher at 6.5 percent growth. Only Marlborough saw a reduction in spending during December, with accommodation spending down by a massive 13.1 percent thanks to the Kaikoura earthquake.

As people across New Zealand contemplate their post-Christmas credit card balance, they are being warned of minimum repayment systems and told to focus on the total amount outstanding on their credit card statement. By paying off as much as possible during the early days of your credit card debt, you can save yourself months of stress and thousands of dollars in repayments. In fact, consumer advocacy groups around the world, including the Consumer Action Law Centre and CHOICE, are calling for minimum repayment structures to be lifted to ensure consumers aren't lumbered with high interest debt for decades.

According to Gerard Brody, chief executive of Consumer Action Law Centre, "The minimum payment might look easy to pay but that's all the bank wants you to pay ... They know that if you do that, they will make a lot of money from you in interest payments. What you should be focused on is the full amount outstanding and paying that before the due date when the interest payments come through." According to CHOICE spokeswoman Nicky Breen, card issuers should even be required to "proactively contact customers" who are only making minimum payments and drawing out their debt, adding "The federal government has had a consultation on broad credit card reform but no decisions have been made as of yet."

Image Source: Chameleons Eye /