Credit cards increase safety when banking and making purchases online, allow us to access car rentals and book hotels, offer points for flights and cash back rewards that we love. In addition to all this they offer a way to quickly and easily access cash when it's needed for everything from making household purchases to paying the bills. 

Safety and security in South Africa

In South Africa, it’s never a good idea to carry around too much cash on your person, after all, the chances of misplacing or losing a wallet or purse are quite high and no one wants the added stress and anxiety of losing a ton of cash.

This type of situation can be especially stressful when it’s time to pay your utility bills or when you’re at the grocery store and realise you somehow lost your money or wallet.

As South Africans, we have learned it’s probably a better idea to carry our debit cards with us since after all most of us can keep our debit card in our phone case or pocket. However, what happens when we do not have enough money in our account right now to purchase and pay for the things we need?

Asking family or friends for a quick loan could be an option, yet we will likely face this situation more than once, so why not opt for a credit card instead?

What is a credit card?

A credit card is issued to users by financial providers and allows users to pay for goods or services against a line of credit. A credit card enables users to utilise this line of credit over and over again so long as the amount borrowed against the line of credit gets repaid monthly or over a period of a few months. This sounds utterly convenient and yet there are many other added benefits to having a credit card.

With all credit cards the credit limit that you will be offered will depend on how much you earn and your affordability. The more you earn and the better your financial status the higher your credit card limit will be. 

Benefits of credit cards;

Credit cards are quick & easy to get

Obtaining a credit card is a fairly simple process whereby you simply fill out a loan application online or in-person with your chosen credit provider. Once your application has been approved, you can either pick up your card from the finance provider's local branch or the card will be couriered to you.

Building & improving your credit score

Once you have obtained your credit card and are using it often and making your required monthly repayments - you are actively busy improving your credit score and showing future lenders that you are able to maintain a stable credit record. It also shows them that you are more eligible for larger loans such as car loans or home loans.

Interest-free periods on credit cards

Credit cards offer you the added benefit of giving you access to cash for a time period during which no interest will be charged to that loan amount. The interest-free period depends on which finance provider you received your credit card from, so be sure to find out your time frame.

Pay off big purchases over time

One of the biggest benefits and possibly the most convenient aspect of having a credit card is the ability to buy big-ticket items such as expensive appliances or pay for major car services. Each of these things can cost well over a few thousand Rands and that’s the kind of money we have lying around. With a credit card, you can make these larger purchases and pay them off over a few months at a reasonable interest rate.

Forex for what?

That’s correct! If you are someone who can either afford to travel abroad or travels abroad for business - when you have a credit card (Visa or Mastercard) you can pay for things instead of buying foreign currency from a bank and carrying around that currency.

Avoid taking out short-term loans and other expensive forms of credit 

When you have a credit card you have instant access to cash when you need it. You do not have to make use of payday loans or other forms of credit. These short term loans tend to be very expensive and since they must be repaid in full on your next payday, you may find yourself short on cash before month end once again. 

With a credit card you can repay the full balance at the end of the month or you can choose to make only the minimum required repayment and repay your balance over a longer period of time. 

Top benefits of credit cards summarised: 

  • Make online purchases, book hotels, rent cars and more - 100% safe and secure
  • Earn rewards on spending 
  • Avoid expensive short-term loans
  • Always have access to instant cash 
  • Pay with your credit card and avoid drawing cash and losing money when abroad
  • Pay off large purchase over a longer period to make them more affordable 
  • Improve your credit score by making use of a credit card and repaying it on time every month
  • Benefit from interest-free periods 
  • Access slow or premium lounges in airports around the world
  • Avoid carrying cash by swiping instead

Credit card reward programs in South Africa

An added bonus of having a credit card is that they’re often linked to a rewards or benefits program of some sort. You can earn rewards when you purchase everyday items - these rewards can give you flight points, petrol points or food and drink rewards.

FNB offer E-bucks which you can spend at their partner retailers or via the E-bucks online store. Some credit cards offer discovery miles while other offer cashback rewards for everyday spending. 

The possibilities are vast and depend on your credit provider. Some even give you cashback rewards with each swipe. Be sure to find out what rewards program your credit provider offers.

Keeping in mind the convenience, benefits and features of having a credit card, are you tempted to get one of your own? What’s stopping you? Consult the web or your current finance provider to find out which credit card options they have on offer or make use of a loan comparison site to see which finance providers offer the best rates and rewards programs. Remember you can easily apply online!