Kiwis freeze the urge to splurge

New Zealanders are resorting to drastic measures to limit credit card spending, including literally freezing their cards.

A survey by financial research and comparison site Finder found more than half of respondents (55 per cent) were taking action to manage credit card spending.

More than one in five had set a limit on their card and 10 per cent kept their card out of sight to avoid temptation.

Among the more creative methods to curb the urge to splurge, 5 per cent said they had cut up their card and a further 2 per cent had put their card in the freezer in a block of ice.

Finder New Zealand editor Angus Kidman said such extreme measures might be amusing but were not the most effective way to manage a budget.

‘‘Hiding your credit card or even freezing it is a bit like throwing away all the sweets in your house when you start a diet – it is a short-term fix, but you are still going to be tempted to buy more when you go to the shops,’’ he said.

‘‘Instead, take a long-term approach by thinking about how your credit card spending fits into your financial goals.’’

Kidman recommended the 50/30/20 rule for spending, with 50 per cent of income going towards crucial bills, 30 per cent for ‘‘fun’’ such as new clothes and dining out, and the remaining 20 per cent going into a savings account. While many credit cards earned users points towards flights and groceries, those benefits were only worthwhile if the card’s balance was paid off at the end of every month.

‘‘Switching to a low-interest credit card is a smart move for those months when you can’t quite pay everything off,’’ he said.

As of October 2021, New Zealanders had a total of $2.9 billion in outstanding interest-bearing debt across the country – a 12 per cent drop on the previous year.

Finder’s research found 27 per cent of people were not doing anything to manage their credit card spending, while a further 27 per cent did not have a credit card.

Millennials (74 per cent) were the most likely to be cracking down on their credit card spending, compared with 43 per cent of Gen X.

‘‘Hiding your credit card . . . is a bit like throwing away all the sweets in your house when you start a diet – it is a short-term fix.’’ Angus Kidman Finder New Zealand editor