Credit cards

Find a line of credit that fits your personality and lifestyle

Credit cards are often the most desired, convenient, and varied forms of credit in the financial world but they are sometimes also the most misunderstood, misused, and abused form of credit.

We know that they offer us many opportunities to make purchases but most people do not understand what benefits these accounts offer or how we could become indebted if we are not aware of the risks. Information is key. Let’s walk through the basics and some facts, tips, and information.

How does this kind of credit work?

A credit card gives you a revolving line of credit that can be used to make everyday purchases, book flights, hotels, rent a car, withdraw cash and shop online. It is called a revolving line of credit because you can use a set amount of money, called a credit limit, over and over again.

Various credit card lenders are available

You do not necessarily have to apply for a card from banks like Nedbank or FNB. There are alternative options such as international brands Barclays, American Express, and Avios.

While a debit card only allows the holder to use money that they actually have in their account, a credit card allows a holder to use money that they don’t necessarily have and pay it back later.

A great way of looking at this is to think of your card as a quick loan provider – there for you whenever you need it whether you’re looking to buy groceries or rent a hotel for your family holiday.

Credit card branding, rewards, and interest-free periods

Most cards will either be branded by Visa or MasterCard and you need to note that both of these are equally accepted throughout South Africa. Visa and MasterCard are independent of your credit provider and essentially provide them with the service of transaction processing. American Express is a credit provider that has its processing system and uses neither Visa nor MasterCard but is not as widely accepted in stores and online.

Credit cards in South Africa

Most credit providers in South Africa offer co-branded credit cards which are offered by a financial provider in partnership with an airline like British Airways or Kulula, a sports team or retailer. Supporter cards are ideal for people who do all of their shopping at a particular store, travel often, or want to show support for their team. Many cards in South Africa offer reward schemes, cash backs, and a variety of different programmes.

Finally, most institutions will offer consumers an interest-free period which means that you can spend money by paying for goods and services without being charged any interest on your outstanding balance. This interest-free period is usually very brief – about 2 months, and once it’s over, interest will be immediately charged on any outstanding balance.

What you need to consider when using your card

Every time that you use the credit on your card, instead of money that you may have put into your account, you are essentially taking out a loan from your provider. This personal loan will have a predetermined limit which is called your credit limit and, you cannot exceed the limit. Every month you will be required to make a minimum payment on the outstanding balance of your account.

This minimum payment is usually expressed as a percentage and can be a very small amount. It is important to note that accounts that offer many rewards will likely also carry a higher interest than basic cards that are not co-branded and offer few or no rewards.

If you’re likely to miss your minimum payments then you must consider the interest rate above the rewards that you will be receiving. Many people are lured into taking out a specific credit card because of these rewards programmes but, with high interest and many terms and conditions including expiry dates that can snatch up all your rewards, it’s not always worth it.

The benefits of credit cards

Many car rental companies will prefer and even insist that a customer provides their card details since it will indicate that you have good credit and will offer them a simple way to keep (and return) a deposit. Shopping online is also easier when you use a card and you can benefit from a range of benefits including purchase protection, extended warranty, and dedicated support staff there to assist you with all of your needs 24 hours a day.

When booking flights with a credit card you are often awarded instant travel insurance of some kind.

In addition, you can always use your card when you’ve run short of cash and you won’t have to make a loan application or take out a payday loan which can prove to be very expensive. Credit accounts can also help you manage debt and earn some decent rewards on things that you purchase regularly.

Is it hard to apply for a credit card?

In the eyes of South African consumers, a credit account is one of the most prestigious and "hard to get" forms of credit but, this isn’t necessarily the case. There are many products designed for students and people with low to medium income that want to build up a good credit history. These accounts are very basic, offer low credit limits, very few (if any) rewards but, are easy to qualify for and can certainly help you get the credit score you need to get a home loan or car finance.

Minimum requirements for credit card approval

The criteria that you will have to meet to get a particular card can depend on the provider. But you will have to be at least 18 years or older, have a stable monthly income, and be a permanent resident or citizen of South Africa. Some credit accounts are indeed difficult to qualify for since they require the applicant to have an above-average annual income and a good credit score but, there are many which do not have these requirements and are easy to get.

Comparing credit providers and products

We have collected and listed all the credit card providers in the South Africa and made a summary of their products available to you for easy selection. If you’re looking for a credit account and want to know what options are available to you, this list of lenders will provide you with all the information you need. When comparing accounts the first thing you need to look for is a product that is available for your specific income bracket.

A line of credit that suits your needs

You can then choose to compare cards based on which ones offer you rewards that you will benefit from, a low-interest rate, a longer interest-free period, or even lower annual fees. There is also a handful of credit card comparison websites in South Africa that can show you exactly what accounts are available, what the qualification criteria for each card are, the interest charged, the annual fees, and what rewards you could benefit from in simple, easy to compare tables and lists.