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Mad Scientist
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  Reply # 1486696 6-Feb-2016 23:02
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That is also 100% true.

 

So it's inconvenience vs lifetime of pain I guess.

 

Maybe somewhere in the middle, CC with very low credit limit that can be increased a little when needed?


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  Reply # 1486698 6-Feb-2016 23:05
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Credit card with a huge limit that you dont overspend on is the best way. Actually, multiple cards so you can put trusted recurring payments and paypal and alipay on one so that you dont have dramas when some random online shop you use is compromised or whatever.





Richard rich.ms

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  Reply # 1486747 7-Feb-2016 07:17
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Like many others out there the very fact interest rates are even being asked about on credit card choices scares the bejesus out of me

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  Reply # 1486750 7-Feb-2016 07:34
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richms:

 

Credit card with a huge limit that you dont overspend on is the best way. Actually, multiple cards so you can put trusted recurring payments and paypal and alipay on one so that you dont have dramas when some random online shop you use is compromised or whatever.

 

 

The one thing I wish NZ banks would offer is virtual card numbers - but it's the one thing none seem interested in offering.

 

 


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  Reply # 1486752 7-Feb-2016 07:37
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To put simply:
Interest rate 14-20% (pa)
Rewards rate 0.1-1.0% minus fee [a $50 fee and rewards rate of 0.5% means you have to spend $10,000 just to offset the fee with the reward]

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  Reply # 1486773 7-Feb-2016 09:04
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I use a credit card for almost all purchases, but I've never paid interest so I don't know exactly how it works. Nonetheless, here's some approximate math:

 

Current: $6,000 balance at @ 13.5% pa interest = $810 pa (excluding compounding) with no points

 

Proposed: $6,000 balance @ 20.0% pa interest with, say, 1% points on value of spend. Interest = $1,200 pa (again, excluding compounding)

 

 

How much do you need to spend to make this worthwhile?

 

Extra interest = $1,200 - $810 = $390pa

 

At 1% points, that equates to $390/1% = $39,000 pa = $3,250 per month

 

So, if you spend at least $3,250 per month on the credit card, then the points cover the extra interest. Just. But with the risk that if the balance increases then the 20% interest will rapidly get out of control.

 

If the interest compounds, which I guess it does, then the required spend will be higher.

 

Also note that interest usually starts from the purchase date, not when the credit card payment to due, which might make things even worse.

 

 

tl;dr Points are a bonus, but don't chase them. Pay off your current debt and never again pay interest on a credit card balance.

:)
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  Reply # 1486831 7-Feb-2016 10:53
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sbiddle:

 

richms:

 

Credit card with a huge limit that you dont overspend on is the best way. Actually, multiple cards so you can put trusted recurring payments and paypal and alipay on one so that you dont have dramas when some random online shop you use is compromised or whatever.

 

 

The one thing I wish NZ banks would offer is virtual card numbers - but it's the one thing none seem interested in offering.

 

 

 

 

 

 

Interestingly, ANZ do this via their app for NFC payments - A friend of mine set it up the other day on his phone, and it set up a new virtual card in the app.

 

 

 

but yes, some virtual cards would be nice, to be able to do exactly what you're suggesting.






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  Reply # 1486842 7-Feb-2016 11:28
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If you need a personal loan for a small amount it can sometimes be cheaper to take a cash advance from your credit card.

The higher interest rate on the credit card is sometimes cheaper than lower interest rate plus setup fees for a personal loan.

Bear in mind with a debt balance on your card the interest free period for other purchases often does not apply.

It is something you need to do your homework on before taking action.


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  Reply # 1486851 7-Feb-2016 11:53
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joker97: To put simply:
Interest rate 14-20% (pa)
Rewards rate 0.1-1.0% minus fee [a $50 fee and rewards rate of 0.5% means you have to spend $10,000 just to offset the fee with the reward]

 

Yes, you need to spend quite a considerable sum to justify most rewards credit cards. For most people, a credit card with a lower annual fee would be a better option. I always do a quick spreadsheet model when evaluating credit card rewards options.


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