Money glossary

48 money words you'll meet in New Zealand, in plain English.

A

ACC earners’ levy: A levy on earnings that pays for ACC, New Zealand’s no-fault cover for injuries.; Read: ACC earners' levy explained
Annuity: A product you buy with your savings, usually at retirement, that pays you an income for life or for a set time.
APR: Annual percentage rate: the yearly cost of borrowing, including the interest and, for most loans, the main fees. The fairest way to compare loans and cards.

B

Bond: A loan you make to a government or company, which pays you interest and gives your money back at the end. Usually steadier than shares, with lower long-run returns.; Read: Investing basics: KiwiSaver, funds and getting started
Bright-line test: The rule that taxes the gain on residential property sold within 2 years of buying it. Your main home is usually excluded.; Read: Capital gains in NZ: the bright-line test, shares and FIF
Budget: A plan for your money: what comes in, what has to go out, and what’s left to save or spend.; Read: How to make a budget in New Zealand (the 50/30/20 rule)
Buy now, pay later (BNPL): Splitting a purchase into instalments, often 4 payments over 6 weeks, usually with no interest if you pay on time. Missed payments can bring fees and harm your credit.; Read: Buy now, pay later in NZ: costs, credit and the rules

C

Capital gain: The profit when you sell something, such as shares or a property, for more than you paid. It may be taxed.; Read: Capital gains in NZ: the bright-line test, shares and FIF
Central bank: The Reserve Bank of New Zealand. It sets the Official Cash Rate (OCR), which other New Zealand rates follow, raising it to slow inflation and cutting it to support the economy.; Read: Inflation and interest rates in New Zealand, explained
Compound interest: Interest on your interest as well as on the money you put in. Over many years it makes savings grow faster, and unpaid debts too.; Read: Inflation and interest rates in New Zealand, explained
Credit report: The record of your loans, cards and repayments that lenders check before lending. You can see your own report for free.; Read: Credit scores in NZ: what affects yours and how to raise it
Credit score: A number that sums up how reliably you’ve repaid credit. Lenders use it to decide whether to lend to you, and at what rate.; Read: Credit scores in NZ: what affects yours and how to raise it
Credit utilisation: How much of your card limits you’re using. Keeping it low, well under a third, helps your credit score.; Read: Credit scores in NZ: what affects yours and how to raise it

D

Debt avalanche: Paying off debts with the highest interest rate first, while making the minimum payments on the rest. It costs the least in interest.; Read: How to pay off debt in New Zealand: avalanche or snowball?
Debt snowball: Paying off your smallest debts first, while making the minimum payments on the rest. Quick wins keep you going, though it can cost more in interest.; Read: How to pay off debt in New Zealand: avalanche or snowball?
Debt-to-income ratio: Your debts, or your monthly debt payments, compared with your income. Lenders use it to judge how much more you can afford to borrow.
Depositor Compensation Scheme: Protection for money in New Zealand banks and other licensed deposit takers: if one fails, deposits are paid back up to a limit per person, per institution.; Read: Banking basics in New Zealand: everyday accounts and savings
Diversification: Spreading your money across many investments, so one doing badly doesn’t sink the lot.; Read: Investing basics: KiwiSaver, funds and getting started
Dividend: A share of a company’s profit, paid to the people who own its shares.; Read: Investing basics: KiwiSaver, funds and getting started

E

Effective tax rate: Your total tax as a share of your total income. It’s lower than your top rate, because the lower slices of your income are taxed less.
Emergency fund: Money set aside for surprises, such as losing your job or a big repair, so you don’t have to borrow. A common goal is three to six months of essential spending.; Read: Emergency fund in NZ: how much you need and where to keep it
ETF: Exchange-traded fund: a fund you buy and sell on the stock market like a share. Many ETFs are low-cost index funds.; Read: Investing basics: KiwiSaver, funds and getting started

F

Fixed rate: An interest rate that stays the same for a set time, so your payments don’t change.
Foreign investment fund (FIF): The rules that tax overseas shares and funds costing over $50,000 in total, usually on 5% of their value each year instead of on dividends.; Read: Where to invest: KiwiSaver, PIE funds or shares?
Fund fees: The yearly charge a fund takes, as a percentage of what you have in it. Small differences add up to a lot over decades.; Read: Investing basics: KiwiSaver, funds and getting started

G

Gross pay: Your pay before tax and anything else is taken off.

H

Home equity: The part of your home you own outright: its value minus what you still owe on it.
House deposit: The part of a home’s price you pay upfront. The rest is borrowed with a mortgage.

I

Identity theft: When someone uses your personal details to borrow money, open accounts or claim refunds in your name.; Read: How to spot and report money scams in New Zealand
IETC: Independent earner tax credit: a small weekly tax credit for people on middle incomes who don’t get other support.; Read: Independent earner tax credit (IETC) explained
Index fund: A fund that buys every company in a market index, such as a country’s biggest companies, instead of picking a few. It spreads your risk and usually has low fees.; Read: Index funds vs picking stocks in New Zealand: why go passive
Inflation: The rise in prices over time. With inflation at 3%, what cost 100 a year ago costs 103 now, so the same money buys a little less.; Read: Inflation and interest rates in New Zealand, explained
Interest rate: The price of borrowing money, or the reward for saving it, as a percentage of the amount each year.; Read: Inflation and interest rates in New Zealand, explained

K

KiwiSaver: New Zealand’s workplace retirement savings scheme. You, your employer and the government pay in.; Read: KiwiSaver contributions in 2026–27: the new 3.5% rate

L

LIM report: A Land Information Memorandum: a council report on a property, covering things like flooding risk, consents for building work and rates owing.; Read: First home buyer guide: KiwiSaver, First Home Loan and costs
Loan-to-value (LTV): Your mortgage as a share of the home’s value. A lower LTV, from a bigger deposit, usually gets a lower interest rate.

M

Marginal tax rate: The tax rate on the next bit of income you earn: your top bracket’s rate. It’s what matters when you get a raise or a bonus.
Minimum payment: The smallest amount you must pay on a credit card each month. Paying only this keeps you in debt for years and costs a lot in interest.

N

Net worth: Everything you own (savings, investments, your home) minus everything you owe (mortgage, loans, cards).

O

Overdraft: Spending more than you have in your bank account. The bank covers the gap, usually for a fee or a high rate of interest.; Read: Banking basics in New Zealand: everyday accounts and savings

P

PAYE: Pay As You Earn: income tax taken from your pay by your employer before you’re paid.
Phishing: Emails, texts or calls pretending to be from your bank, the tax office or a delivery firm, trying to get your passwords, codes or card details.; Read: How to spot and report money scams in New Zealand

R

Real return: What your money earns after inflation. A 5% return when prices rise 3% is a real return of about 2%.; Read: Inflation and interest rates in New Zealand, explained

T

Take-home pay: What you actually receive after tax and other deductions. Also called net pay.
Tax bracket: A slice of income taxed at one rate. Only the income inside each slice is taxed at that slice’s rate, so moving into a higher bracket never lowers your take-home pay.
Tax code: A code on your payslip that tells your employer how much income tax to take. A wrong code means paying too much or too little.; Read: NZ tax codes explained: M, ME, SL and secondary codes
Tax credit: An amount taken straight off your tax bill. A credit of 100 cuts your tax by 100, so it’s worth more than a deduction of the same size.

V

Variable rate: An interest rate that can go up or down, usually following the central bank’s rate, so your payments can change.