No credit card is actually free, even one with no annual fee. Money either comes out of your interest payments, your rewards, or the fine print. Adding it all up takes a few minutes of reading, and it is the only reliable way to judge any card. To see whether a card is worth it, add up what it charges and put a real value on what it gives back.
The annual fee
Some cards charge an annual fee just to hold them, and some charge nothing for that. A no fee card is a good baseline unless the extras are worth more than the fee. The trap is keeping a fee paying card out of habit, paying the fee year after year while the rewards or insurance you got for it go unused. Ask whether you would buy those perks with your own money; if not, you are effectively paying for nothing.
Interest-free days
Most NZ cards offer a number of interest-free days. This is the gap between a purchase landing on your statement and your payment due date. If you pay the full balance by the due date, you pay no interest on those purchases at all. The moment you carry any balance, you typically lose that interest-free window for new purchases, which is why carrying a balance gets expensive fast. Our guide to managing credit card debt goes deeper into how this works.
What rewards are actually worth
Rewards cards earn points, cashback or travel perks on your spending. Cashback is the most honest to value because it comes back as money. Points programs convert into dollars, goods or flights, and the exchange rate varies, so a "point per dollar" claim does not tell you what the point is worth. To compare properly, work out what a full year of your spending earns in real terms against the annual fee and any higher interest rate.
Two rewards cards can advertise the same points scheme and still differ in practice. Some boost the rate on certain categories like groceries, fuel or restaurants, while others give a flat rate on everything. If your spending is concentrated in the boosted categories, the card is worth more to you than a flat everyone card; if it is not, the boosted categories are marketing you never benefit from. And points expire or devalue for some programs, so a balance that sits unredeemed can quietly be worth less by the time you use it. Treat reward value as a real number you calculate from your own spending, not a headline.
The fine print that quietly costs money
- Overseas transactions. Cards often add a fee on top of the base conversion when you spend in a foreign currency. On a trip this can be a significant and easy to miss cost.
- Cash advances. Taking cash out on a card is nearly always more expensive than the purchase rate, and interest can start accruing immediately with no interest-free days.
- Late or missed payments. A missed minimum payment can attract a fee and lift your interest rate, and it shows up on your credit file.
- Promotional fine print. Balance transfer deals and low introductory rates revert to a higher rate after a set period. Always note the ongoing rate, not just the teaser.
So is a rewards card worth it?
The honest rule is simple. If you always pay your balance in full, rewards and convenience are the only reasons to use a card, and rewards can genuinely pay you to spend money you would spend anyway. If you ever carry a balance, the interest you pay typically costs far more than the rewards you earn, and a low rate card usually makes more sense. The point of comparing the two is not to find the flashiest perks but to find the smallest total yearly cost for the way you actually use the card. Our guide to credit card types compares the options in detail.
Pick one number to compare a card by: the full cost in a normal year of typical use, including the annual fee, the interest you would realistically pay, and any overseas or cash advance fees, minus the cash value of rewards you will actually use. Advertised points and headline rates are marketing; the annual cost is the truth.