What are the changes to overdrafts linked to Tertiary and Graduate Packs?

We've removed the monthly facility fee of $2.00 and introduced an interest rate of 5.00% per annum.

Why has Kiwibank started charging interest on previously interest-free overdrafts for customers on the Tertiary or Graduate Pack?

We recommend an overdraft is used for unexpected expenses or short term cash shortages. By removing the monthly fee and introducing a very low interest rate, you're only charged when your overdraft is being used (e.g. your account is in debit and money has been taken out of your account). We believe the new pricing structure better reflects the way an overdraft should be used.

What is the difference between the old pricing and the new pricing?

Example overdraft balance* Old pricing (0% p.a., plus $2 monthly fee) New pricing (5.00% p.a., no monthly fee) Difference per month
$100 $2.00 $0.42 $1.58 less
$500 $2.00 $2.08 $0.08 more
$1,000 $2.00 $4.17 $2.17 more
$1,500 $2.00 $6.25 $4.25 more
$2,000 $2.00 $8.33 $6.33 more

*This assumes your daily overdraft balance is the same every day for the entire month.

When did these changes happen and how were customers informed?

  • For Tertiary and Graduate Pack customers opening a new overdraft facility on or after 1 February 2018, the new pricing was applied immediately. Details of this pricing were available on our public notices page from 17 January 2018.

  • For Tertiary and Graduate Pack customers with an overdraft facility in operation before 1 February 2018, the new pricing came into effect from 1 May 2018. We notified customers by email and/or letter of the upcoming changes from 16 January 2018. We removed the monthly fee on 1 February 2018, giving customers the opportunity to pay down or close their overdraft before the introduction of the 5.00% per annum interest rate on 1 May 2018.

What other fees or interest rates apply to an overdraft linked to Tertiary and Graduate Packs?

  • There's no application fee.

  • There's no fee to change (increase or decrease) your overdraft limit.

  • If your overdraft limit is exceeded by more than $20 at any time during the month, there's a $10 per month account out of order fee.

  • If your overdraft limit is exceeded by more than $20 at any time during the month, the interest on the balance over the approved limit is charged at 22.00% per annum.

When deciding whether to apply for an overdraft, we suggest you look at what the total cost of borrowing will be, including any application fees, monthly facility fees and/or interest rates.

StudyLink have some good information about the different ways you can manage your student loan along with your everyday living costs.