Advantages of having a credit card.

By admin
14 November 2013

1 A credit card is the cheapest way of handling your day-to day transactions. It is accepted in most shops. Most credit cards do not charge a fee for purchasing at a shop; the exception is Pick ‘n Pay. A debit card used for the same transaction would carry a fee of between R1,50 and R2,50.

2 All credit cards have an interest-free period of between 30 and 55 days. This means that you can use your card for purchases and only pay the outstanding balance in the next month free of interest. This applies only if you pay the full amount that is outstanding.

3 The card is a convenient alternative to cash and you can pre-fund your card, like you would a debit card. All credit cards are controlled by strict rules that make a credit card a safe transaction product, and most come with added benefits such as free lost-card protection and free card replacement.

4 The bank will charge you interest on a reducing balance or money owed at the time, as it is required by law, whereas other lending institutions such as retailers and money lenders could charge you interest on the original amount for the entire period. For example, if your initial loan was R2 000 and your current outstanding balance is R1 000, the bank will charge you interest on R1 000 rather than R2 000. Banks also charge a lower interest rate than other lenders, about 3% less.