How much do you pay for your garage card?
With many petrol stations now accepting, at the very least, debit or cheque cards, and some accepting credit cards as well, is it worthwhile to have a garage card?
This week Justmoney looks at the garage card offerings from the big four banks (Absa, Nedbank, Standard Bank and First National Bank (FNB)) and what clients get for their fees.
According to Vinolan David, head of card issuing at Standard Bank, “consumers have a variety of options available to pay for fuel purchases, namely garage [cards], debit cards, cheque cards and credit cards.”
David pointed out that there are two options available to Standard Bank clients when applying for a garage card. These are either a standalone card, or a card linked to a credit card.
If a customer makes use of a standalone garage card, they have a monthly limit, “and must pay the minimum amount stipulated on the statement each month.”
For a garage card that is linked to a credit card, the purchases made on the card are debited to the credit card account. The credit limit on the garage card is set by the credit card. “The garage card is an access mechanism to the credit card,” noted David.
“Credit limits on garage cards are set by a credit scoring system which assesses your income and expenses,” revealed David.
However, as fuel stations have made the move to accepting VISA and MasterCard for fuel related purchases, Standard Bank is in the process of terminating the origination of standalone garage cards.
“For now, to eliminate the potential customer impact at fuel stations who do not yet accept the MasterCard and Visa card associations, garage cards will still be offered and available for customers,” explained David.
The garage card (both linked or standalone) has a monthly card fee of R28, in addition to a transaction fee.
David revealed: “Garage card transactions cost R5.20 for each transaction, irrespective of the transaction amount or type, as long as the purchase qualifies to be paid with a garage card, and irrespective of whether the garage card is linked to a credit card or a standalone garage card.”
According to David, the interest rate charged on the garage card will depend on the individual customer’s credit profile.
“Interest rates on garage cards that are linked to a credit card would incur credit card rates. The standalone and linked to credit card garage card interest rate differs from customer to customer depending on the customers profile,” explained David.
The Absa garage card is available to all Silver, Gold, Platinum, Private Bank and Wealth customers. In addition, customers who have a monthly income of at least R4 000 can apply for a credit card, as well as additional cards, such as a garage card, explained Willie van Zyl, Absa head of card issuing.
There are two options available for people wanting a garage card with Absa.
1. The garage card can be linked to an Absa cheque account:All garage card transactions are debited daily against the cheque account, this is sold to customers at the ranch and needs to be approved at the branch.
2. The garage card can be linked to an Absa credit card account:“All Garage card transactions are debited daily against the credit card account. Garage card transactions will attract interest from transaction date except if the credit card has a credit balance,” revealed van Zyl.
For both options, you will not receive a garage card statement, but rather the garage card transactions will be incorporated into the cheque account or credit card statement.
The monthly card fee is R25.70. However, van Zyl highlighted: “Absa Private Banking customers do not pay the monthly fee.”
The cost per transaction is R4.50, with interest being charged from the day of the transaction.
“Garage cards have been a historic part of the product offering and whilst there are other solutions available, there will still be customers who prefer this product,” added van Zyl.
According to van Zyl there are a few benefits of having a garage card. “A Garage card can be used for petrol, spares, oil, and toll gates and is a useful instrument to keep track of motor or travel related expenses.”
However, despite these benefits, van Zyl noted that there are also several disadvantages of having a garage card. These include:
· “A garage card linked to a cheque account does not provide an additional limit – it shares the funds in the cheque account and is debited against the cheque account every day,” explained van Zyl.
· “A Garage card linked to the Credit card will attract interest from the transaction day if the credit card account does not have a credit balance. Every transaction incurs a transaction fee (vs no transaction fee when a credit card is used),” revealed van Zyl.
· A monthly service fee is levied (vs a single monthly service fee when using a credit card for fuel purchases)
· It is an additional card to have to carry around with you.
· A garage card from a local bank cannot be used in South Africa’s neighbouring countries.
· For Absa clients, garage card transactions do not earn Absa Rewards (if the client is signed up for the Absa Rewards programme). However, customers using their Absa credit or debit card and filling up at a Sasol garage, can earn five percent cash rewards.
In order to qualify for an FNB garage card, customers need to be 18 years or older, earn R80 000 a year or more, and meet the affordability criteria. You do not need to be an existing FNB client, as there is the option for a standalone FNB Petro Card, or a linked Petro Card, which will be linked to your existing FNB credit card, explained Chris Labuschagne, CEO of FNB credit card.
“As an existing customer your Petro Card can simply be linked to your existing profile, however if you do not have a credit card with FNB you will need to provide proof of income and your last three months bank statements,” added Labuschagne.
Both the standalone and linked Petro Cards have a standard facility fee of R11 per month. The standalone card also has a monthly fee of R31.50, and the linked card has a fee ranging between R16 and R25 per month.
Interest will only be charged “if you do not settle the full outstanding balance at the end of the month,” explained Labuschagne.
According to Labuschagne, one of the benefits of having an FNB Petro card is that customers have access to AA Emergency Roadside Assistance with Standby You services.
Furthermore, “Standalone Petro cardholders and holders of linked Platinum, Private Clients and Private Wealth Petro Cards, benefit from a free Take me Home service, plus your Petro Card can be used to pay for fuel, toll fees and general vehicle maintenance and you can earn up to 15% of your full spend back in eBucks,” noted Labuschagne.
“As soon as you get your first car it is advisable to get yourself a Petro Card for two reasons. Firstly for safety, should anything go wrong while you are driving you will benefit from the services of the AA to assist you. And secondly, a Petro Card will enable you to manage you monthly fuel requirements without the need to carry large amounts of cash around. An added bonus is that you will earn rewards on your fuel spend which can be used amongst other things to by fuel,” added Labuschagne.
Marc Zon, senior business manager of credit and charge at Nedbank, pointed out that “there is no underlying criteria for a garage card but specific criteria for the underlying account which in most cases is a current account or a credit card. These two accounts would have specific criteria, especially if a credit facility is involved. Once you have either a credit card account or a current account a client can link a garage card to that account.”
In addition, Nedbank also offers a standalone garage credit card account. This is subject to the same credit and affordability checks that are carried out for any other credit card account application.
“The pricing is dependent on the business solution that you opt for, the price ranges from R160.00 to R240.00 per annum. Furthermore there is a fee of R4.40 per transactions,” explained Zon.
According to Zon, “The Nedbank Garage Credit Card is the perfect card for vehicle-related expenses that include paying for petrol, oil, spares and repairs, overall vehicle maintenance and even tollgate fees, where the client wants to separate their vehicle specific costs, and their local fuel stations don’t accept Debit or Credit cards.”
However, Zon noted that there are disadvantages to having and using a garage card, such as transaction fees for each purchase.
Interest is charged for purchases using the credit facility (the garage card is linked to a credit card). “Interest is charged from day one and the amount varies according to the client’s product and their risk profile,” explained Zon.
While garage cards can offer added convenience for customers, such as being able to use them at toll gates and to pay for fuel, the added transaction fees, as well as the monthly fees, mean that you may end up paying more for using a garage card than if you had used your cheque card. As van Zyl and David pointed out, many garages now accept debit or cheque cards at the very least to pay for fuel, with some also accepting credit cards as well.
However, Zon added: “[A garage card] is beneficial to those individuals who need to claim transport expenses from their employers or claim for a tax deduction. It is also useful for individuals who prefer to keep their vehicle expenses separate from their other payments. Alternately if the client lives in an area where only garage cards are accepted then this would be the preferred solution.”
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