Credit cards with zero fees increase in 2016

When signing up for a credit card, you always need to factor in any ongoing fees and charges to work out the real cost of the convenience. But according to CANSTAR’s database, the number of cards with zero annual fee is on the rise in 2016

So, you’re in the market for a credit card to help you out with your personal finances. Used wisely, a credit card can be a great way to manage your money, maybe even a way to earn some rewards points or to top up your KiwiSaver. Checking the interest rates on credit cards is extremely important – but it’s not the only charge to take into consideration. How much thought have you given to the credit card ongoing fee and, have you checked whether there are options to avoid that fee altogether?

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Credit card ongoing fees: what are they?

As well as factoring in the credit card purchase interest rate – and the revert rate if you have switched credit cards after a balance transfer consumers need to think about how much they are signing up to pay in annual fees. Many credit card providers charge an annual, semi-annual or ongoing fee. This fee is really a charge to the consumer for the convenience of easy access to credit. Not all credit cards have annual fees. But rewards cards, for example, will often have this fee attached.

Credit cards with zero annual fees

Credit cards with zero annual fees

According to CANSTAR’s database, there are now more options of credit cards with zero ongoing fees in 2016 compared with the previous year. As at December 2016, five out of the 44 credit cards CANSTAR rated have zero annual fees (11.36%). This compares with 4 out of 45 in December 2015 (8.88%). The majority (26) of credit cards CANSTAR analysed have an ongoing fee of between $51 and $150.

Choosing a card with a zero ongoing fee means one less extra cost to factor in as you try and manage your finances.

Here are all your options in 2016 if you’re looking for a zero-fee card:

Company Card Purchase rate (per annum)
American Express Air New Zealand Card 19.95%
ASB Bank Visa Light 13.50%
Kiwibank MasterCard Zero 16.90%
Warehouse Money Purple Visa Card 19.95%
Warehouse Money Visa Card 19.95%

This compares with the following zero-fee credit cards available in 2016:

Company Card Purchase rate (per annum)
American Express Air New Zealand Card 19.95%
Kiwibank MasterCard Zero 16.90%
Warehouse Money Purple Visa Card 19.95%
Warehouse Money Visa Card 19.95%

Here’s a breakdown of ongoing fees, looking at cards with and without rewards systems:

 

More to take into account than annual fees

A zero-fee credit card is understandably attractive, after all, who wants to pay an extra charge when they don’t have to? But does the zero annual fee outweigh any interest rates? Before selecting a credit card, make sure you check what interest rates you’ll be paying on any purchases you make.

According to CANSTAR’s database, all five of the zero-fee cards in 2016 have a higher purchase interest rate than the minimum credit card interest rate on the database (12.69%). However, the maximum rate for zero-fee cards (19.95%) is lower than the maximum rate for all credit cards with rewards (20.95%). And, according to CANSTAR’s database there is a credit card without rewards with an interest rate of 25.99%. Selecting the credit card best suited to your needs is not an exact science. The right option will depend entirely on how you spend. For example, if you promptly pay off any credit card bill – then a zero-fee card might make sense. But, if you’re struggling to pay off credit card debt, choosing a card with a lower purchase interest rate might be of greater importance. ASB, Westpac and BNZ have all picked up 5-star ratings in the low rate credit card category.

Do your homework before choosing a credit card

If you’re still a bit stuck in the credit card selection department, CANSTAR is here to help you with the decision-making process. CANSTAR’s 2016 credit cards ratings report is a great place to start. We’ve done the leg work when it comes to finding out what’s on offer in the market – and we’ve found some providers with winning offerings when it comes to purchase rates, fees and rewards.

Five-star winning providers by category:

Category Provider
Low fee ASB, Kiwibank
Low rate ASB, Westpac, BNZ
Rewards per $12,000 Warehouse Money, Gem
Rewards per $24,0000 BNZ, Gem
Rewards per $60,000 BNZ, Westpac
Rewards per $120,000 Westpac, BNZ
Flight rewards per $12,000 American Express
Flight rewards per $24,000 American Express, Westpac, Kiwibank, ANZ
Flight rewards per $60,000 Kiwibank, Westpac, ANZ, American Express
Flight rewards per $120,000 Westpac, Kiwibank, American Express

You can read CANSTAR’s full credit card ratings report here.

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