GEM Visa Review

What Every Existing and Prospective GEM Visa Customer Should Know

Updated 9 October 2023

Summary:

GEM Visa offers a generous 6 month interest-free and no-repayment period on any single purchase above $250, but to avoid higher-than-credit-card interest rates, the balance due MUST be paid off at the end of the interest free period.
The true cost of "interest free" is not $0. You'll need to pay upfront setup fees and annual account fees.
The standard interest rate is 28.99% p.a, and a slew of fees apply to the card which can make it an expensive finance option if you already have trouble paying bills on time.
If you're late with a payment, you'll pay a late fee and Interest is charged on late fees (at the standard 28.99% rate).
At least 200,000+ New Zealanders have one; its closest competitor is the Q Card and Q Mastercard.

Our Review
In this guide, we outline the way a GEM Visa works, the fees and interest a cardholder is subject to, an overview on in-store and online purchases, as well as tips for best use.

Please note: MoneyHub is not a Financial Adviser, and this guide has been published to outline the positive and negative features of using a GEM Visa as a means of making purchases.

What We Cover

GEM Visa - the Basics

There is a standard interest-free period of 6 months for any single purchase over $250. This means purchases made will not incur interest until the end of the sixth month after their purchase.
Purchases below $250 have up 55 days of interest free, with payment due 25 days after the statement date.
Many merchants partnered with GEM Visa offer specific deals which can extend the interest-free term to 12, 18 and even 24 months on certain eligible purchases.
Minimum repayments are either 3% of the balance owed, or $20 (whichever is greater). GEM Visa customers also have the option of repaying with fixed installments.
Customers are also offered a range of insurance premiums covering repayments, the damage/loss of purchased goods and life/family.

GEM Visa: Claims & Reality

We Examine the Claims made by GEM Visa:

Claim 1 - "0% p.a. interest"
Is it True?
Yes, for purchases above $250 and for 6 months, unless the retailer specifies a promotion which extends the interest-free term.

Claim 2 - "0% p.a long term deals at some of NZ’s best retailers".
Is it True?
Yes, but it does depend on what the retailer is offering. Some retailers exclude any more than 6 months interest-free on some items and brands, so it's essential to check exactly what the deal is. Don't believe that a flashing advertisement for "24 months interest free" applies to every purchase.

GEM Visa - 15 Essential Must-Knows

Paying off a GEM Visa follows the same rules of a paying off a credit card

The basic rule is the balance due that you don't pay off is what you will pay interest on. To limit the chance of this happening, GEM Visa offers five ways to make balance payments:

Direct Debt – permitting either minimum payment, a specific regular payment or the total GEM Visa balance owed
Internet Banking – GEM Visa is listed as a payee under all New Zealand banks.
Phone Banking – any bank will set up GEM Visa as a payment party.
Automatic Payments - for fixed payment weekly, fortnightly or monthly from your bank account.
Cheque (although this can delay funds from clearing for at least 5 working days, so you would pay interest on any interest-incurring balance)

Every purchase over $250 is is entitled to six months interest free, with no repayments

This is the standard offering from GEM Visa, and it works for overseas purchases too. It's a generous deal which is financially savvy if you can pay off your balance in full when it's due. No credit card in New Zealand offers such generous terms for irregularly-sized purchases; as a comparison the Q Card's interest free period is 3 months, although there is no minimum purchase value.

But, and it's a big "but" - if you can't pay off the balance, you'll be paying 28.99% p.a. until you clear it. To put it in dollar terms, if you have a $4,000 balance owing, you'll pay $85 a month in interest until it's paid. New purchases on the card will be entitled to the interest-free period and we talk about interest in detail in point 4 below.

Miss ONE payment and you could be forced to pay your TOTAL balance immediately

GEM Visa makes it clear in their terms and conditions - "If you are in default under your credit contract we may demand immediate payment in full of all amounts you owe under your credit contract including any amounts accrued, authorised or charged but not yet debited to your account". This means even purchased in an interest-free and non-repayment period would need to be paid back at once. While GEM Visa avoids enforcing this in practice, it's good to keep in mind and make sure at least the minimum payment due is paid on time every month.

You'll repay the balance of your GEM Visa at a minimum of 28.99% p.a, and it's added to your bill daily

It's important to understand the interest rate charged by GEM Visa - it is twice as high as a low interest credit card and may keep you in debt unless it is managed wisely.

Interest Rate – applied to all purchases: GEM Visa charges a standard interest rate of 27.99% p.a.

Interest is charged daily
GEM Visa charges interest on any purchases that have graduated from their interest-free period, at the standard 27.99% interest rate. GEM Visa accrues interest daily, with the total for the month appearing on your statement.

If you have trouble paying bills, read on:
MoneyHub has a real concern that GEM Visa’s low 3% minimum payment amount, coupled with its high interest rate, could keep cardholders in debt far longer than what they might expect. Specifically:

The 27.99% annual interest rate compounds on an account daily, with repayments processed monthly.
An account holder with a $4,000 balance, making consistently monthly minimum payments of $120 (3%) will pay $1,000 of interest over one year and still be left with around $3,400 to pay.
This cost is calculated before standard account fees, charges and extra interest if a payment is missed.

Miss a Payment and FEES will apply

GEM Visa charges a Default Fee of $15 for a late payment, and allows up to four consecutive defaults before your account is elevated to a collections agency.

GEM Visa also charges annual fees, as well as other account fees

There are a number of account and administration fees, outlined below:

Account fee - $52 per year. GEM Visa charges customers $52 every year to administer the card, just as most credit cards have an annual fee.
Establishment fee - $55 one-off: This is a one-off fee that is billed to your GEM Visa when you apply to pay for a purchase using GEM Visa for the first time. If your application is successful you’ll be billed the one-off $55 fee. If you have an existing GEM Visa and your account is active, you won't pay this fee.

The True Cost of Interest Free
It's important to keep in mind the true cost of "interest free" is not $0. You'll need to pay upfront setup fees and annual account fees. For example:

If you buy a TV with 24 months interest free for $1,000 you'll pay a $55 setup fee and two years of GEM Visa fees ($52/year), so your purchase will actually cost $1,159 (~12% more than the store price).

GEM Visa charges fees for non-standard services

We've included the fees and free services that apply for non-standard requests and services:

Cancellation fee: If you cancel your GEM Visa, there is no fee but all balances must be paid off for the account to be closed.
Early repayment fee: if you pay off your unpaid balance early, there is no fee - this is standard for all credit cards.
Refund of balance: If you ask for any money overpaid on your GEM Visa to be returned to you, there is no fee.
Payment Handling at NZ Post: There is a $1.70 fee for each over the counter payments at NZ Post Branches
Statement reprints – $5 per statement reprint; you can find statements online and print these yourself.
Card Replacement: $5 – if you lose your GEM Visa and need a new one to be sent to you.

When you make a payment, it’s is apportioned to all of your purchases

GEM Visa operates an "order of priority" when you make payment. To outline where a payment goes, we’ve list the order below:

Firstly: Any payment due in the current or a previous payment period for any installment plan advances, and including all the related fees, charges, interest and principal relating to those advances);
Secondly: The money will be applied to charges such late payment fees
Thirdly: Money will then be applied to cover all other fees, charges, interest and Gem Visa Shoppers Protection premium due in the current or a previous statement period.
Forth: Any other amount due from a previous statement period
Fifth: Any other amount due in the current statement period
Sixth: Any amounts not yet due for payment

If you decide to specifically pay one purchase and not others, the other purchases could go into arrears and incur more fees and charges.
GEM Visa requires you to ensure your minimum payment (3% of the closing balance due).

Example:

The minimum repayment is $100
You make a payment of $120: $100 of the payment will cover the payments marked 1. to 3. above, and then be applied to meet balances due from previous statements (4.) or the current statement (5.)

The Insurance fee is capped at 1% of your closing balance

GEM Visa offers an insurance policy to cover damaged goods, unemployment, accident and illness. The fee is 1% of the monthly closing balance - to ensure a complete picture, we have outlined the policy in detail under GEM Visa Insurance below.

You CAN withdraw money on your GEM Visa, but it's not interest-free

As the GEM Visa is a credit card, you can withdraw money on it (known as a "cash advance), although fees do apply:

Cash advance fee:

New Zealand ATM withdrawal: $1.00
International ATM Withdrawal: $1.50
International transaction fee: 2% of the cash advance

Financial Hardship? GEM Visa is legally obligated to assess your situation

If you find yourself struggling to meet or keep up with payments, you’re legally entitled to apply for a "financial hardship" consideration. This lets you inform GEM Visa about your financial issues and how repaying your balance is causing financial difficulty. Our debt help guide has more information and sets out template letters for such applications.

You’ll be charged account fees even if you don’t have a balance to pay

Just like any credit card, you'll be charged $52 every year for the administration of the facility. The fee is payable even if you don’t have a balance owing. Fees do not have interest-free period, and are also subject to a 28.99% interest rate as well as arrears fees for non-payment, so make sure to pay 100% of the amount when it appears on your closing balance.

You can’t use another credit card to make GEM Visa repayments

This is a rule for all credit cards, not just the GEM Visa. However you can apply for a balance transfer (see 14. below).

Most banks’ Balance Transfer credit cards accept GEM Visa balances

The good news is that if you’re stuck in a cycle of 28.99% interest rates on balances that never seem to clear, our guide to balance transfer credit cards outlines the best offers currently available. You’ll need to apply with a bank you’re not currently with, and if you get approved, your GEM Visa balance will reduce by the amount you’ve been approved to transfer.

Your balance owing can go ABOVE the set credit limit

If interest charges and/or fees are made to your account while the balance is at or near to the credit limit, your credit limit can be exceeded. GEM Visa does not charge a fee for breaching the credit limit, but it also means purchases will be declined until payments are made to bring the balance below the credit limit.

GEM Visa Insurance

GEM Visa offers one insurance policy, marketed as "Shopper’s Protection". It costs 1% of the monthly closing balance of your Gem Visa account, limited to a maximum of $50 a month. If you take it out, it's charged to your account and paid monthly.

What is it and how much cover is provided?
The policy covers a number of situations, which we outline below:

Price Protection Insurance - this repays you the difference between what you paid and what the item is now should the price go down within 6 months at the same store. There are exceptions however, such as jewellery and second hand items.
Repair, refund, replacement of goods - the insurance covers the cost of any eligible purchases that are lost, stolen or damaged within 6 months of purchase.
Lost card replacement - up to $200 if your card is reported stolen.
Repayment insurance - this is the most complex insurance, which promises a lot but it's important to understand the limitations. For example, the policy offers to repay your Gem Visa balance if you can't work due to illness, lose your job, have to give up your job to care for a family member. But, the limit of the cover is $5,000 which means if you any more you won't be covered for that portion.

How much does it cost?
GEM Visa's insurance costs 1% per month of the monthly closing balance, capped at a maximum of $50/month. The insurance fee is charged directly to the GEM Visa - if it's not paid off in full, interest will apply at a rate of 28.99% p.a. If you have an average closing balance of $5,000 per month, you would pay $600 a year for this insurance.

Examples of the monthly insurance cost (in bold) based on closing balances of $500 to $5000:

$500: $5
$1,000: $10
$1,500: $15
$5,000+: $50

Are there any limitations in the fine print?

Yes, quite a few. The Repair, refund, replacement of goods cover as mentioned above only covers your purchases within six months (180 days) of purchase. It's really important to know that the policy only protects new purchases for six months; it's not an extended warranty and shouldn't be purchased as one.

So, what exactly do I get?

Injured or ill? The repayment insurance kicks in after 30 days if you've been continuously disabled and are unable to work, and the limit of any claim is $5,000 even if your balance owing is above that.
Unemployed? To claim under the Involuntary Unemployment cover you will need to be out of work for 90 consecutive days and again the limit is $5,000.

GEM Visa Stores and Retailers

GEM Visa is accepted at hundreds of stores all over New Zealand. The best indication of the range of retailers is found on the retail partners webpage.

GEM Visa - Our Conclusion

If you have a history of paying off credit cards, a GEM Visa can be a useful extra card in your wallet. With six months interest-free on any purchase over $250, it's a benefit that is unrivaled in New Zealand.
To avoid interest charges, make sure to tick the "Pay Closing Balance" box on a direct debit form.
If you have trouble paying bills on time, you will probably want to avoid the GEM Visa. The interest rate is above-market (28.99% p.a.) and you could easily find yourself stuck paying barely more than the interest charges on a month to month basis.
We don't think the insurance is great value if you have a low risk of being made redundant. The $5,000 cover limit and 1% premium means you'll pay $600 per year if you need the $5,000.
The number of merchants offering interest-free deals beyond the standard 6 months is significant making the card more beneficial for long term finance options.
Cardholders should remember that the retailer offering an interest-free deal may not be the best deal overall. We suggest you shop around and avoid limiting yourself exclusively to GEM Visa retailers. For example, a new TV bought at a GEM Visa retailer may be cheaper upfront from another retailer, even if you "only" get the standard 6 months interest-free offer rather than a special 12 month interest-free promotion.