Kiwis are flying - and giving their credit cards a working over

Personal Finance / news

The amount spent overseas by Kiwis on their credit cards has hit a new record high for a May month

22nd Jun 23, 3:41pm by David Hargreaves

Source: 123rf.com

If it looks like things are getting gloomy and doomy at home, what do you do?

Why, zip off overseas, of course. And take your credit card. And spend, spend, spend.

But then put the card away when you get back. And that's what Kiwis appear to be doing.

New figures released by the Reserve Bank show that spending overseas on New Zealand issued credit cards hit a new high for a May last month.

The $605 million billed to Kiwi cards overseas last month was the highest amount put on NZ issued cards offshore since August 2019 and shows that Kiwis have most definitely rediscovered their wings after the years of being couped up at home due to the pandemic. (Note, the offshore spending figures are NOT seasonally adjusted.)

The offshore spending in the latest month compares with just $436 million in May 2022 and $309 million in May 2021.

In May 2019, before the onset of the pandemic, $552 million was spent on NZ issued cards overseas. The previous record for a May month was the May of 2018, when $554 million was billed to NZ cards.

The $600 million mark had been breached only twice before, with more than $650 million spent overseas on NZ cards in both July 2018 and 2019. So, it will be interesting to see what happens next month...

But while folk appear happy to spend up offshore, back home belts are being tightened. And that certainly applies to credit card use.

The RBNZ reports that seasonally adjusted domestic billings on New Zealand issued cards were $3.771 billion in May, down 1.9% from April 2023. And the April figures were, seasonally-adjusted, down 2.9% on those for March.

Outstanding billings on NZ issued cards were down 0.8% on the month at just under $6.1 billion.

Billings on overseas issued cards used in New Zealand dropped in May from $0.5 billion to $0.4 billion, falling for the second consecutive month, which would be expected with the tourist numbers dropping off with the onset of winter.

Total credit limits on NZ issued cards were $21.2 billion (not seasonally adjusted) in May. This was 0.9% lower than May 2022 and the lowest since April 2015.

The RBNZ said the weighted average interest rate effective on personal interest-bearing advances increased from 18.7% in March to 18.9% in April (this data is lagged by one month). This is the highest since March 2009.

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38 Comments

by pin3cone | 22nd Jun 23, 4:10pm 1687407047

I'd love to dig into this data further and find out a bit more about who's tightening their belts vs. who's spending up large overseas.

Would it be too bold to theorise those who made bank selling off some assets during the housing bubble are now just enjoying the fruits their fortune? Of course it wouldn't be that crystal clear, but one wonders what the winners of the great inflation quietly do with all that spare cash.

by Rob Reid | 22nd Jun 23, 7:08pm 1687417681

Exactly my thoughts. The people who have been handed all that wealth can't see a problem.

by 100bucks | 22nd Jun 23, 9:16pm 1687425407

Handed?... What an arrogant ass!

Are you handed your wage?

Are Job seekers handed the dole.

Success envy is so ugly.

by General Comment | 23rd Jun 23, 7:54am 1687463686

Edit: Not enough caffeine to be bothered this morning.

by interesting1234 | 23rd Jun 23, 8:30am 1687465845

You've been handed your long-term capital gains

by 100bucks | 23rd Jun 23, 10:43am 1687473826

Nothing worked for is "handed".

Buying, flipping, selling houses is harder than you think and has more risk than you office bound Arm chair admirals could handle.

The dole is handed over!

by FCM | 23rd Jun 23, 9:27am 1687469244

My son and his GF are going over....they SAVED and now are going to travel to spend their SAVINGS as the country was SHUT down for basically two and a half years...so of course this was going to happen. Don't panic Kiwis have always traveled, I myself love travelling to new places, not just in NZ, to experience different cultures and climates. Nothing to do with capital gains bla bla bla....have a look next time you are at a airport I'm sure travelers cover every demographic of NZ.

by HGWR | 23rd Jun 23, 9:11am 1687468307

In my experience it's yo pros with no house, no plans to buy one, recent wage rises and anxious to travel now they can.

by delboy | 23rd Jun 23, 10:35am 1687473347

The injection of billions into the economy during covid pumped up house prices and many took the opportunity to cash up.

And bravo to them.

by nguturoa | 22nd Jun 23, 4:22pm 1687407747

Did I not say last week that money is being spent over seas, hence the data shows spending has reduced a bit.

Still plenty of liquidity in the market and pausing of rates by RBNZ is a big mistake. Inflation will rise and controlling it will be more difficult. Pain to run longer because we are just too soft to take hard decisions.

by dumbthoughts | 22nd Jun 23, 4:33pm 1687408399

Must be plenty of punters out there with cash on the hip.

Here's an anecdotal example:

For her sins, my wife is a big Taylor Swift fan (and I'll stick my head above the parapet and admit to quite liking some of her music too).

Her Australian tour dates were announced yesterday, and last night my wife showed me Tik Tok videos various of twenty-something Kiwi women (in the main) booking whatever flights they could find to Sydney or Melbourne at whatever price, and paying through the nose for accommodation. Video after video after video of it.

This is before the tickets have even been released for sale, and realistically it will just be a crap shoot if you get one ... unless you can spring for something like the Amex presale at a cool ~$1000 per ticket (and how many 20-somethings have an Amex card anyway)

There's going to be a flood of people who've bought flights and accommodation at vast expense who won't even be able to get tickets, but the cash is shovelling out the door faster than the speed of "Tay Tay's" private jet.

I'm weighing up taking her as it's a dream come true for someone who has listened to her music for the best part of 15 years, since she was an obscure teenage country artist, but flights went from about $800 return to $2000 return overnight (Chch - Sydney, Air NZ with a bag and meal). Minimum $500 a night for any decent accommodation in central Sydney, and I don't think I can stomach $1000 per ticket ... even an old romantic as myself.

But plenty will be paying that, and would gladly pay more for the opportunity.

by Nzdan | 22nd Jun 23, 6:44pm 1687416257

You're busted! I thought my wife was having an affair with someone!

by Rob Reid | 22nd Jun 23, 7:18pm 1687418310

What, you guys think you have the same wife?

by dumbthoughts | 22nd Jun 23, 9:34pm 1687426475

Stranger things have happened in the Interest.co.nz comment section

by 100bucks | 22nd Jun 23, 9:23pm 1687425816

And that's why this current generation cannot afford a house!

by Uncle Bulgaria | 23rd Jun 23, 9:33am 1687469637

It really isn't

by 100bucks | 23rd Jun 23, 10:10am 1687471808

It is!

by Sam B | 23rd Jun 23, 6:24pm 1687501488

Ha. No, it really isn’t. This millennial would never dream of such extravagance. More frugal than you can imagine, decent job, and still no shot buying a house.

by Jack Lumber | 22nd Jun 23, 4:33pm 1687408422

If you dont spend it they will tax it. I know lots of people who have worked very hard, pay a lot of tax and are feeling more like the fluffy bunny you shake to get more.

They have decided to just spend it instead and kick back.

by kwbrn | 22nd Jun 23, 5:35pm 1687412111

I hate to break it to you but you are being taxed by spending it. NZ 15%, AUS 10%, Europe around 20%. You should read this if you feel over taxed.

https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates

by Firstclass | 22nd Jun 23, 4:36pm 1687408588

A naive question here on

The increase from $552 to $605 million, so back in 2019 our $NZ was stronger(forex), and we also had 4 years of inflation.

Is this really a meaningful comparison ?

by rav | 22nd Jun 23, 4:38pm 1687408690

Sold our rental property. Travelling the world with 2 young kids. No point investing or saving in this country as you ll get Taxed more.. Decided to travel at least 8weeks every year.

by Pa1nter | 22nd Jun 23, 7:33pm 1687419201

Kapai. There's more than one way to skin a cat.

It's all really only designed for large corporate monopolies. And down and outers.

by printer8 | 22nd Jun 23, 4:59pm 1687409967

Care needs to be taken in jumping to conclusions on this data.

The level of credit card spending is not necessarily entirely due to increased spending by Kiwis overseas . . . . the shift from cash to credit cards is likely to have a significant influence in credit card use especially when comparing to a time span such as the past decade or even pre-Covid.

Previously when I travelled overseas I would usually take $NZ1000 in foreign currency and use ATMs to draw out more while away.

Prior to departure it is now very difficult to get any foreign cash from NZ banks with most branches not carrying any foreign cash at all including $A.

On the last week-long trip I took to Australia, on arrival I took out $A300 in cash for incidentals from an ATM . . . returned to NZ with $A220. Credit cards use was universal (apart from cassino).

Even used minimal cash on last trip to Rarotonga despite them using $NZ.

by kiwikidsnz | 22nd Jun 23, 6:11pm 1687414276

I'm heading off overseas tomorrow for a month Oz & SE Asia to visit family. My main bank credit card is there only for emergencies because of the high transaction costs (& a bit of security risk), I will use my WISE multicurrency debit card for everything.

by 100bucks | 22nd Jun 23, 9:37pm 1687426661

Westpac and TSB have foreign cash.

You can take up to 10k.

by Gold Kiwi | 22nd Jun 23, 9:54pm 1687427662

The banks' exchange rates are terrible, which is why it's better to use a Wise card.

by 100bucks | 23rd Jun 23, 10:13am 1687472008

Bullshite! Do the number and fees/ charges calculations

by interesting1234 | 23rd Jun 23, 8:37am 1687466234

Enjoy your trip. The wife and I are off overseas in a month for 6 weeks in SE Asia. Far more cost efficient to go for longer in cheaper countries, live like a king and queen and get some heat in while experiencing something new. Beats a concert in AKL by the time you add flights, transport, accomodation, food and drink, may as well be a $1500-2k affair. Conversely, only $500 for the return leg form Cambodia, and they wonder why kiwis go overseas.

by kiwikidsnz | 23rd Jun 23, 9:17am 1687468628

Thank you. I'll also be taking a break from the NZ commentary, I'm confident that the interest.co community will maintain their usual high stds. ;)

by 100bucks | 23rd Jun 23, 10:16am 1687472202

Yip. But the humidity is a killer.

Penang. The best for street food.

by Palmtree08 | 22nd Jun 23, 6:42pm 1687416148

Great to see NZers so intent on reducing their climate, and environmental impact generally.

by Rob Reid | 22nd Jun 23, 7:17pm 1687418259

Clean Green NZ.

About 35 years ago I picked up a German hitchhiker and when he mentioned the clean green thing I went into a medium length rant about centuries of environmental rape and pillage.

He was mouth open shocked - had heard nothing but marketing spiel prior to that.

Nothing changes until its forced to.

by Northern Lights | 22nd Jun 23, 8:54pm 1687424049

Try this out - take the 5 year chart of US loans

https://tradingeconomics.com/united-states/loans-to-private-sector

Compare it to the Tesla share price over the same period

Compare it to the bitcoin price over the same period

Compare it to the S & P 500 over the same period

Compare it to the NZX over the same period

Notice anything? What would you say the lag was - 6 months? Guess what's going to happen to the Tesla share price, the bitcoin price and the S & P next. Maybe even the NZX.

Am I wrong?

by Uncle Bulgaria | 23rd Jun 23, 9:36am 1687469791

Yeah I've heard similar about M2 money supply contracting for first time in decades. Basically the cash is drying up.

by mrsbrownsboy | 23rd Jun 23, 10:07am 1687471673

The spend figures have increased but are still much less than they would have been if things had been normal over the last 3.5 years. When I wasn't able to travel for almost 3 years, I didn't spend/waste the money I had saved for it on anything else...I just left it in the bank...but I am spending it now. And I will put it on the credit card as that's basically the only way you can spend money overseas on flights, hotels and rental cars...and pay it all off when due. And I know many others that are doing the same

by K.W. | 23rd Jun 23, 12:30pm 1687480259

Its expensive setting up a home in Australia. And you won't be able to get an Australian credit card for some time (until you have a credit history), so you will be dependent on your NZ one.

by ChrisOfNoFame | 23rd Jun 23, 4:28pm 1687494510

"And that's what Kiwis appear to be doing."

No. That's what some Kiwis are doing - most likely those who are older and wealthier and are enjoying good returns on their term deposits.

Meanwhile - the "bulk of Kiwis" are desperately trying to make ends meet.