In today’s ultra-modern and fast world, a large number of people in South Africa regularly use credit cards to pay essential bills and make necessary purchases. According to data, 6.9 million South Africans use credit cards provided by different banks. Due to the growing digitalisation of the economy in recent years, more and more South Africans love to have a Credit Card. In January 2024, South African online shoppers made 43% eCommerce transactions using credit cards,
Despite this positive trend, there are people who speak against having a credit card as it leads to overspending and a cycle of unaffordable debt. Therefore, the most important question is- how to use a credit card wisely in South Africa? Let’s consider some recommendations outlined below.
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What are the benefits of using a credit card in South Africa?
The careful use of a credit card allows you to enjoy a good number of advantages and lead a happy financial life. There are some major advantages of using a credit card in South Africa-
- Easy Access to Required Cash
Due to the growing cost of living and hyper inflation in South Africa, the shortage of cash in everyday life has become the order of the day. It becomes quite difficult to arrange funds for necessary expenses if you don’t have cash reserves or your friends and relatives refuse to offer financial help. Having a credit card allows you to access the required cash immediately and make the necessary transactions to keep your life going smoothly.
- You Pay Essential Bills On Time
Depending on living standards, people need money to pay different essential bills every month. Sometimes, they have cash shortages, but urgent bills still knock at the door. The possession of a credit card allows them to pay all your essential bills on time and avoid late fines and other associated difficulties.
- You Can Maintain A Positive Credit Score
In today’s financial world, wherein people take different loans from time to time, having a good credit score is very important. It allows people to conveniently get the desired loans and lead a smooth financial life. The availability of a credit card allows you to pay all your bills on time even if you don’t have cash left in your main bank account and maintain a positive credit score all the time.
- You Enjoy Peace of Mind
People become quite restless if there are pending bills and they need to pay them anyhow on time. The use of a credit card gives you peace of mind as he always has the pre-approved cash to spend as per your desire.
How to Use A Credit Card Wisely in South Africa?
- Get Familiar With Your Credit Card Terms and Conditions
The first step of the careful use of a credit card is to understand its terms and conditions fully. When you express your desire to get a credit card, multiple service providers will contact you with their offers. Go through the available options and compare credit cards on multiple factors such as the credit limit offered, interest rates, annual fees and reward programs. Always keep in mind that the proper understanding of the terms and conditions of your credit card bill help you to use it accordingly and avoid unexpected difficulties.
- Create a Monthly Budget
It is the most important step to ensure the prudent use of a credit card. Depending on your overall monthly income and spending habits, you must create a monthly budget for expenses and determine how many times you need to use the credit card to cover the unpaid bills. Track credit card expenses regularly and try to reduce it as far as possible.
- Know Your Credit Card Spending Limit
You should be aware of the spending limit of your credit card and use the available money accordingly. It will help you to keep yourself away from overspending, which leads to many problems in the future. You should be careful while doing online or offline shopping and stay away from impulsive buying.
- Pay Your Credit Card Bills on Time
Usually, a good number of people in South Africa use credit cards mercilessly to make multiple transactions throughout the month but they forget to pay the bill on time. This is a bad habit, which not only downgrades your credit scores but also invites legal problems. In proportion to your monthly income, you must have sufficient money to pay the credit card bill on time.
Take advantage of the grace period or use instalment repayment option to pay credit card bills as per your convenience. It will establish you as a responsible credit card user and helps avoid difficulties..
- Don’t Withdraw Cash From Your Credit Card
If possible, use your credit card to make online transactions only. Don’t withdraw cash from an ATM using your credit card. Always keep in mind that cans advances typically come with higher interest and fees. If you refrain from cash withdrawals from a credit card, it will help save a good amount of money every month.
- Use Debt Consolidation
There are many people in South Africa who use more than one credit card. If you are among them, then you must consider debt consolidation if you have a high balance on multiple credit cards. This process will allow you to merge all your credit card loans into one loan and then pay the debt conveniently. It will also enable you to save your resources on interest payments and other expenses associated with loan servicing.
- Use The Available Rewards and Benefits
Service providers offer certain rewards and benefits if you use their credit cards regularly for different transactions. If possible, you should use credit cards for making everyday transactions instead of debit cards and keep a close eye on the reward points collected. Go through the conditions of those reward points and benefits and use them before their validity expires. It will enable you to make the best use of the credit cards you have and properly manage your resources.
Be Careful About The Security of Your Credit Card
The use of a credit card definitely allows you to have a smooth financial life and make transactions as per your requirement, but be careful due to the growing instances of cyber crime related to credit cards. To protect your credit card from falling into the wrong hands or being misused, you should follow the below mentioned recommendations-
- Maintain the privacy of the information related to your credit card in all circumstances. Don’t share confidential information with anyone in any case as it would lead to credit card missuse and potential economic losses.
- Regularly review credit card transactions to ensure you’re using it in a proper way. It will also help you to track fraudulent transactions that you did not make and alert the service provided to do the needful as required.
- Use your credit card on secured POS and websites. It will help protect the sensitive details related to your card.
- Keep changing transaction pins from time to time to add an enhanced layer of security to your credit card.
Using a credit card definitely brings convenience and piece of mind to its user. But credit card frauds are increasing by leaps and bounds in South Africa. Follow these recommendations to use your credit card properly and ensure its security in all circumstances.
