Club cards and phone insurance on accounts

2012-06-30 12:05

Often a consumer will open an account at a store with the aim of paying it off in full over six months.

As most store cards do not charge interest over a six-month period, this can be a cost-effective way to shop but only if you pay it off in full over the period.

After the account is paid off the customer assumes there are no more fees to pay.

But if you have signed up for lost card protection or a club magazine, for example, those fees continue to accumulate and you may suddenly discover that you owe hundreds of rands in unexpected fees.


Club card fees

Your lifestyle clubcard – which gives you discounts when buying movie tickets, discounts at certain dining places and discounts when buying flowers at certain florists – comes at a cost.

If you do not want these benefits you need to make it clear as this saves you from paying additional costs on your monthly instalment.

One of the perks of having a club card is a free fashion magazine from the retailer posted to you, the postage cost of which is deducted from your monthly instalment.

If your account is not paid in full, your club card fee will not be paid as it is deduced from your instalment.

It is advisable to always pay the amount due in full to avoid getting your account into arrears.


Account protection plan

Account protection plan is another fee you may not realise you are paying on your clothing account.

The fee is to settle the balance should something happen to you such as retrenchment, disability or death.
On average you pay about

33 cents for every R1 000 that you owe the store.

This means that the higher the balance, the higher you pay on account protection plans.

Customers whose accounts are on 12-month plans are especially vulnerable to this as they usually have larger balances which accrue interest.

Customers on six-month plans save more on the account protection plan because they only pay for the money they owe with no extra interest.

The account protection plan fee is deducted from your monthly instalment.

Since the introduction of the National Credit Act, which came into effect in June last year, if you open an account it is compulsory to take an account protection plan.

However, if your account was opened before September last year, you can opt not to have an account protection plan.

The account protection plan settles your account should you become disabled or get retrenched.

It is imperative for customers to know that while you have account protection in place to help you in time of need, if your account is in arrears when you become disabled or get retrenched the store will not settle the account on your behalf.


Cellphone insurance

If you take out cellphone insurance on your account and your account goes into arrears, your insurance gets cancelled automatically.

The retailer will not inform you of this until you make a claim.

If you lose your cellphone while your account is in arrears you will not be able to claim as your account is cancelled.

The Foschini Group cancels your insurance if your account is in arrears for two months.

Even if you settle your account you will not be able to renew your insurance.

Edgars also cancels your insurance if your account is in arrears for three months, but when the arrears are cleared your insurance resumes automatically.

However, if you lose your cellphone while the account is in arrears, you will not be able to claim from it.

The store requires that you report your lost or stolen cellphone within 48 hours at the store and you have 30 days in which you can put a claim for insurance.

It is imperative to make sure that your account is always up to date if you are going to enjoy the benefits of club cards and cellphone insurance, otherwise it is nothing less than enriching the cellphone insurance company and the retail store that is already making more money on you by charging you interest on every cent that you owe.

It is important to note that Foschini will not insure a cellphone that was not purchased at Foschini while Edgars will.

Both retail groups require that you have an account to be able to buy insurance from them.

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