Arghhh – having to pay interest on the credit card!
Filed under: Avalon's Money Thread, Cost of living, Interest Rates, Credit Cards & Mortgages in NZ
Well, for the first time in five and half years – I cannot pay off the whole balance on our credit cards, and we will be paying interest.
This is quite depressing.
I guess I should be happy that its only likely to be a few months where we have to pay, and that we have been able to organise our finances so well for so long that we haven’t had to do this thus far while we have lived in New Zealand. But still – its damned annoying.
Especially since the interest rate is a whopping 19.95%
So – from here on in – hard nosed budgeting and spending restrictions to get us back on track as fast as possible.
Why has this happened?
Some really big bills I’m afraid. Despite the emergency fund, which I still have some left of, we have had some really big expenses come through and no income. The emergency fund is coving our living expenses and top ups on the rentals, but it cant cover:
- Some large medical bills.
- Set up costs for Hubby’s contracting business.
- Legal fees
- Buying furniture for an apartment in the city. (and yes – even though we have 2 houses worth of furniture – it still turns out we need a few things – that was a depressing moment!)
Hubby has income coming in now, but almost all of it is paying the setup costs: new computer, travel, phones, internet bills, city pad – it all adds up.
And at least this time I actually know what I’m doing. I know how to work through the budgets, I know how to cut costs, and I know how to stick to the harder decisions. One thing I am sure of – that debt is not going to be there long. Ill be paying money into it as soon and as often as I can.
I’m just not sure how to cut my coffee budget
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And interest rates went up.
Filed under: Banks, General Budgeting, Interest Rates, Credit Cards & Mortgages in NZ
Mr Bollard did as he was told by almost everyone that he would do and put the base rate in New Zealand up to 2.75%
I wait with baited breath to see what the banks do and how much is going to cost us all. Honestly – I do!
I thought it was worth sharing some gems from the article on stuff though – because its the kind of thing that is said so often, makes no sense, and doesn’t get challenged:
“With the domestic recovery on track, we expect the RBNZ will continue to hike the OCR steadily in 25 basis point moves at each meeting, barring a substantial deterioration in New Zealand funding costs as a result of the European soverign (sic) debt crisis.”
Um Ok, my mortgage has to go up becuase of something of that happened in Greece? I don’t live in Greece – I live in New Zealand! What next – a butterfly flaps its wings in Mexico and Im declared bankrupt???
Cameron Bagrie, chief economist at ANZ New Zealand, also expects the OCR to hit 5 percent over time.
I predict that one day I will die. I wonder if I can find someone to pay me to state the blindingly obvious. Rates go up, rates go down. At some point it will hit any number of numbers. Pick one – you too can be an economist!
“Along with ongoing growth in Australia and recovery in the United States, this has so far offset weak growth in some other export markets. Against this backdrop, New Zealand’s export commodity prices have increased sharply over the past few months, boosting export incomes.”
Sorry – even I cant turn that into plain English!
But basically – the banks will probably increase the amount of money they now want off you – cos NZ money just got more expensive. The reason they didn’t drop the rates when the OCR dropped was because Overseas money was too expensive. Either way – we get screwed.
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Why exactly should interest rates in New Zealand go up?
Filed under: Banks, Cost of living, Economics, Interest Rates, Credit Cards & Mortgages in NZ
The reserve bank meets tomorrow to tell us all whether our interest rates are going up. I’m not really sure why they need to bother because as usual the papers and so called “experts” have already told us they will be going up.
But why?
Well basically Reading through an awful lot of very boring guff, it’s because things are getting better financially for New Zealand. And what better way to celebrate than for some arse to tell us our mortgages have to get more expensive. I mean- it wouldn’t do for us to go out and try and spend some of the extra money we all apparently have burning a hole in our pockets!
I know life isn’t meant to be fair, but come on Mr Bollard. This year we are already getting an increase in GST, and due to the new emissions trading scheme the power companies are going to increase our power bills and petrol is going to have more tax on it, even Air New Zealand is upping the cost of flights to cover it. And it’s not as if the banks are charging fair mortgage rates in line with the the reserve bank anyway. The bank fixed rates are the same as when the OCR was twice what it is now. And yet it almost worth betting real money that an increase on Thursday will be a perfect excuse for the banks to charge even more.
I just don’t get it.
They giveth with one hand and they nick it straight back with the other!
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Will KiwiBank become an AussieBank.
Filed under: Banks, Property & General Investing, Retirement, Pensions and Kiwisaver
There are rumours that the NZ (National) government are thinking of selling some State Assets. Which for many people is the worst thing a government can do and brings out all sorts of diatribes. I’m in two minds about it myself – I think it’s good to have assets – even if you are country, but also you have to be prepared to sell them if they are basically not working for you, or you are in financial trouble. There’s just no point having a boat load of shares looking pretty if you cant afford your mortgage this month.
But when it comes to government assets – a whole load of issues come up. Which as far a my admittedly not-politically-astute mind can grasp comes down to Labour wont sell them – National will. In fact just prior to the financial world crash – the NZ government at the time (Labour) went so far as to buy back KiwiRail which had previously been privatised and was failing, at a massively over inflated price of $690m when it was worth about $369m.
So the first head on the chopping block this time round looks to be KiwiBank.
Now I’m not sure of all the pros and cons of the case – but what I can tell you is I’m pretty bloody disgusted at the sheer amount of bunkum being spouted about the effect this would have on new Zealand if it was sold. It’s a bit like the plonker who said that if we used credit cards we would lose our sovereignty to Australia. The way the opposition is talking it up – a float of KiwiBank and sales of shares to New Zealanders will ensure that KiwiBank is owned by the Aussies. Or even worse – in the hands of greedy “foreigners”.
And thus – ordinary Kiwis will lose out on something that they own.
But here’s the thing:
Firstly – if the Shares in KiwiBank are sold to Kiws – then it will only end up in the hands of “greedy foreigners” if the Kiwis sell the shares to make a fast buck. So who would really be the greedy ones?
Secondly – do Kiwi’s really “own” Kiwibank? If we do – where the hell are the profits we should be sharing in? The government gets a cut – which technically I guess Kiwis get back in the form of government spending – but c’mon! That hardly the same as being a shareholder and having a stake in the company – or getting dividends.
Thirdly, we also “own” most the electricity companies in New Zealand, or rather as with KiwiBank the government owns them. And how are rewarded? With ridiculously high electricity prices which just go up and up and up while the companies we “own” make more and more profit. Its estimated that we have been overcharged by the electricity companies we “own” to the tune of $4.3 Billion in the past 5 years. Hmm – yes – ownership of companies via the government is really working for us.
So all in all – when you hear about the horror of selling national assets – don’t necessarily believe what the papers are telling you. If you disagree with privatisation – fair enough. But just take a moment to wonder if you are being fed a line that is somewhat an exaggeration. That’s not to say that selling KiwiBank (or anything else) is a good idea. Just that it wont cause the destruction of life as we know it.
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Bank Charges when traveling to Australia 2
So what do the banks screw you out of on top of the odd company trying to get you to pay extra for no reason?
Well, it felt like we needed to Phd in something-or-other to understand the charge structure and whether we were better off getting cash out or paying on a credit card. So here is the fee structure from ASB
Cash Withdrawals Overseas:
$5.00 charge each time.
And then there’s this little gem – which applies to both Cash Withdrawals and Credit card transactions.
Offshore services margin
All cash withdrawals made at an overseas ATM using your ASB ATM or EFTPOS card will either first be converted into US dollars and then into New Zealand dollars or converted directly from the currency in which the cash withdrawal was made into New Zealand dollars at the applicable conversion rate.
Offshore service margins of 1.1% are added to the converted New Zealand dollar amount of each cash withdrawal made using your ASB ATM or EFTPOS card at an overseas ATM, excluding those withdrawals made using Commonwealth Bank of Australia ATMs.
The offshore service margins comprise a Visa international service assessment of 0.85% imposed on ASB by Visa and passed on to you, and an ASB margin of 0.25%.
The converted amount and the offshore service margins will appear on your statement.
For overseas cash withdrawals made using Commonwealth Bank of Australia ATMs an ASB retail exchange margin of 0.7% is included in the conversion rate by ASB. The total converted amount (including the ASB retail exchange margin where applicable) will appear on your statement.
What the bleeding hell does that mean?
Well in short – it means they are going to make a profit out of the conversion from NZD to the foreign currency. The problem is that some profit is already loaded into the exchange rate, so this is on TOP of that profit.
But the real dastardly bit is the part where they say they will either convert straight from NZD to the foreign currency if you withdraw cash – or they will bounce it via USD first. Now why are they doing that?
Basically, because they can skim some more money off the transaction by effectively trading currency at your expense if there is a wide variation in the currencies. Like the Holiday Inn and its 1.5% surcharge: in itself its small amounts, but added together with all the transactions occurring – its gotta add up. I wish I knew how it all worked - but like much in banking its all shrouded in mystery and complicated mathematics – so we as the consumer cant really ever check things like this. Which is annoying and quite frankly wrong. What are the banks hiding?
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Bank Charges when traveling to Australia.
NOTE: Opps – this got stuck in drafts rather than getting posted, so should actually have been posted before the “What the Shysters at the Holiday Inn did next”.
Sorry for any confusion.
If there’s one thing guaranteed to get my blood boiling that is not anything to do with immigration – its bank charges. I read today that New Zealand is following Australia in taking a class action against the banks for overcharging on “special fees” such as dishonour fees: charging $30 when it actually costs them about $1 to process the thing.
However still no-one is shouting about the ridiculous amount we get charged to spend money on our New Zealand cards when we go abroad. Even more disgusting when you consider that all the New Zealand banks apart from Kiwibank are actually owned by Australia – so why the bloody hell are they charging us fees when we visit their country and try to spend our money. All the money they screw out of us in profits comes here anyway – so it really is beating the crap out of us when we are down.
This evening we ate in the Hotel Restaurant at the Holiday Inn. As we went to sign the bill (which was being charged to our room) we saw a notice on the bottom of the receipt saying that there was a 1.5% charge added if you paid by credit card. Now this just pisses me off!
Companies should not expect their customers to pay their bank fees. We pay our own for crying out loud. But this got us wondering: were they expecting us to pay this 1.5% charge on our room bill as well?
Oh yes – they were!
Unfortunately when we asked about it at the front desk we were pointed (literally) to a sign (single) on the desk what mentions the charge.
Ok – I don’t care – its not on the booking form when you book the room, we weren’t told about when we checked in– the (single) sign was not pointed out to us, and it was only that we actually tend to read receipts that meant we knew were going to be charged extra on our bill. We asked for a business card for the manager and were given a feedback form to fill in.
Um – I don’t want a feedback form – I want the charge taken off and I want to speak to the manager! Now we were severely peeved. Eventually I decided that I was not going to be able to sleep while I was this angry. This is supposed to be relaxing trip – a chance to get well after the last few years of stress and illness: so to have to greedy money grabbing hotel decide to screw us out of extra money was not something I needed to deal with right now.
We eventually managed to get hold of a duty manger, and asked for the charge to be removed. This went reasonably well in that the charge was taken off, but I don’t think she really ever got why I was so angry – she kept asking what else had they done to upset me or what else was lacking in the hotels service. It is completely lost on these people that screwing their customers out of even a cent more than they should be is just wrong. Its unethical, its dishonest and it relies on the customers not noticing. And it is the most appalling customer service.
Lets be clear on this:
They do it because they know almost none their customers will notice the extra charge, and if they do, they won’t say anything about it.
Those of us that object to it get the charge removed.
Be one of those people!
Please don’t give them the pleasure of treating you like a mug. You already pay extra bank charges to buy anything when you go abroad – so don’t be conned into paying the companies bank charges as well. It’s a cost of them doing business – just like buying toilet rolls for the staff toilets. They don’t ask you for an extra dollar on your bill so the staff can wipe their bottoms do they? So why do they feel they can charge you to cover their bank charges?
BTW – the same thing happened this evening at the Crowne Plaza restaurant- owned by the same parent company (Intercontinental Hotels Group- IHG). Again – no mention when we made the booking, no one told us when we arrived, we just spotted the (single) sign on the desk. We spoke to the maitre’d before we sat down and said we wouldnt pay it – and could he let us know if this was a problem as we would not take the table if it was. He immediately told us that there would be no charge, and confirmed that later in the meal.
They know damn well they are breaking consumer law by not making clear extra charges at the time of booking, and they know damn well that they have to remove the charge if people tell them to.
Is what I say to this behavior!
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Be careful with re-fixing your Fixed Rate Mortgages
Filed under: Banks, Interest Rates, Credit Cards & Mortgages in NZ
Oddly enough – the New Zealand banks are trying to take a chunk of your cash for the privilege of paying more interest. Gits.
Fixed rates in New Zealand are currently way too high. Floating rates are at about 5.75% with fixed rates running at about 6% for 6 months upto a whopping 8.5% for 5 years.
Usually although in theory you would need to pay a fee for re-fixing a mortgage, but this is waived. Now it seems the banks are being a lot less keen on waiving that fee.
An ASB Bank document obtained by the Herald on Sunday said it introduced the new fee schedule to “reflect the time and complexity in providing the best in customer service”.
The fees would now apply from a series of dates between March and May.
While the document shows that the cost of the fees is reducing in some cases – from $250 to $50 – brokers say the customers will have a tougher time getting fees waived.
This is something we have had with ASB for about 2 years now. They wont waive bank charges, though they are still not charging us for new loans as we re-structure our lending. But to be honest – the cost of banking with them is going up, and the service is going down. I am certainly not getting “the best in customer service”. In fact – I’m getting lousy service – I just have to pay for it now.
So you do need to be careful. And you do need to shop around. Loyalty to a bank is frankly silly – they just do not deserve it – so if you are coming up to renewal time on your mortgages – shop around and go with whoever sweetens your life the best. Bear in mind that here in New Zealand one mortgages can splint up into several parts. That can add up if you get charged the full $250 to re-fix each part of a loan.
The only customers not having to pay fees for refixing a mortgage were those referred to as a “high value clients”.
The bank said in the document that fees were required by law to be “fair” and represent the cost of handling a loan. It said the fees were changing to “fairly reflect the time and resources we allocate to client interactions”.
The document also showed the ASB Bank was wiping a $500 contribution previously given to customers to help pay for legal fees.
Well, I’m certainly a “High Value Client” at ASB, but they still don’t give a damn. I have however managed to get them to reimburse us some legal fees that we have incurred because their loans department keeps stuffing up. So much for paying for service huh?
So be careful. Shop around, and make sure that paying off your mortgage is a high priority. That’s the one thing that will give you leeway to make your own choices and switch banks. Although the recession is basically over – the fallout from it could last years. The place we see that most is in the cost of mortgages and the unwillingness of banks to lend money to people who need it. Having small mortgages means the banks love you because you are a low risk to them. That’s a good position to be in!
Thanks to Christine for the heads-up!
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Cheques – not quite as you know them.
You know – I haven’t actually written a cheque in over 5 years. I just don’t use them here. With most people taking Eftpos, or direct credit via Internet banking – its actually quite rare for most people to need to do it. On the odd occasion that cheques are needed – I get cash instead (I don’t even know where my chequebook is!)
However, there is something you need to bear in mind if you do choose to use them here. Apart from for some really bizarre reason there’s a tax applied to their use, and you have to pay the bank for the privilege of getting a chequebook. Ok, that last bit’s probably not a huge shock.
Cheques in the UK are automatically “crossed” by the bank. That’s those 2 lines that you find with the words “AC Payee” or “Account Payee”. In New Zealand, they don’t have that. Now this is a basic security detail. As basic as it gets. That note on the cheque means that it can only be paid in to the account of the person you wrote the cheque to. It can be paid into someone else’s account.
The Banking Ombudsman has just highlighted this issue in an article in the Dom Post. It seems that people are crossing their cheques “Not Negotiable” which does not offer the same protection “Account Payee Only”.
The ombudsman notes that Banks could just sort this out by pre-printing the phrase, but stops short of telling them to get a grip and actually do it.
So be aware: NZ banks are failing to operate one of the easiest security measures they could use, and they charge you for the chequebook. If you do use them when you get here, make sure you cross them properly, because apparently the banks aren’t refunding funds that go missing.
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Bank Guarantees on loans
Filed under: Banks, Interest Rates, Credit Cards & Mortgages in NZ
When you take out a mortgage to buy your home, the mortgage is “secured” against the house. Most people get that, and understand it – it’s the bit that says “You can lose your home if you do not keep up the repayments on your loan” sort of thing.
But on top of that – you also get what is called a Personal Guarantee. Which says that even if we take your home, and you find some nifty way to try and get round paying us what you owe us, you personally guarantee that you will pay us what we want – even if its 20 times what your house was worth. Or something to that effect. Strangely enough its a nightmare of small-print and legal waffle.
And it’s the bit we seem to have no end of problems with in our dealings with ASB. I dread trying to organise mortgages with them now, because I can almost “guarantee” that there is gonna be a problem with the Guarantees.
We have yet another problem with them right because Ive actually paid off one of my mortgages.
Which is obviously a bit of a big thing for me. (Blog will be here as soon as I have the statement to copy and prove it!) It seems the ASB loan department have finally looked through the file, and worked out that one of the trustees in our Family Trust changed about 3 years ago. They were told, but it looks like everyone ignored it. Now they want us to sign another guarantee to replace that one.
For a loan that we have paid off.
Bloodsuckers!
So, as I am already a bit disgruntled with the loans people for screwing us around a few weeks ago, Ive said I wouldn’t do it unless they covered the legal costs – as Lawyers are needed (they are the trustees that changed). ASB have agreed to pay $250.00, so I’m instructing the solicitors that if it takes more than that, they need to stop working on it and tell me. I’m not paying for another bank stuff-up. They wont reduce my bank fees, so I’m not in the mood to indulge them right now.
I’ve also said that I need it in writing that the old guarantee is canceled, and that they are only wanting us to guarantee the amount of the outstanding loan – a rather large $210,000.00 less than the original guarantee.
Banks will try and sneak in a silly amount, but you can tell them to make the guarantee for the size of the loan only – it will have a clause in there that they can come after you for any associated costs and interest anyway.
I wait with baited breath to see what they will do.
One of the things to note about this situation, is that you may be advised to set up a family trust when you come to New Zealand. Usually on the premise that it protects your assets such as your home. But then the bank makes you sign these guarantees, and they bypass the whole family trust anyway. SO don’t be fooled. We are happy to have a family trust, because we have a business and investments, and it will to some extent protect the home my parents and brother live in if we stuff up. But every business loan we have has one attached, so if you go belly-up, the banks can come after us – there no hiding.
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The financial crisis explained
As explained by a ‘banker’ -- thanks to The Now Show (18/12 again);
“In laymans terms it works like this; if you get yourself into financial difficulty, say you fail to manage your own finances properly and are incompetent enough to get yourself into enormous debt, with absolutely no hope of paying it back -- the bank takes your money.
If on the other hand your bank fails to manage it’s finances properly, is incompetent enough to get itself into enormous debt with absolutely no hope of paying it back -- the bank takes your money.
It’s really very simple”
Which also reminds me of The Two John’s, explaining the financial crisis {watch with some irony for the Google ad’s for GE Money, Kiwibank etc.. -- hmm, someone didn’t think about what to exclude from the key words};
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