Guiding consumers since 2009

10 Smart ways to save using your credit card

By Angelique Ruzicka

If you couldn’t live without your credit card, then you are not alone. According to FNB Credit Card data, customers spent a total R6.7 billion over the December period in 2015, a 22% increase when compared to the rest of the year, according to FNB Credit Card data. The largest increases in spend were on entertainment followed by luxury goods and then home spending.

But you shouldn’t think of your credit card as just a money-spending tool. It can actually save you money too. While we often whip out our credit card at times when we need to stretch our finances or make big purchases, there are smart methods you can adopt to make the most out of your credit card and the benefits that come with it. Here are ones you can take on now that will save you money: 

  1. Take advantage of the interest free periods: You don’t need to panic and pay your entire credit card off now if you can’t afford it. If you can though, then you should. If you can’t pay your credit debt off immediately, remember that you have some time to pay back the money before the interest kicks in. Some banks will give you up to 57 days interest free on purchases so money you spent on Christmas presents back in December 2016 will only start garnering interest in February, depending on when you made your purchases. Some may offer you fewer interest free days – if you are a Virgin Credit card holder you get 55 days, for instance. So make sure you know how many days you get free. Speak to your bank to find out if you have an interest free period, which day of the month in starts and pay your debt off before then.
  2. Cut down or get rid of fees: If you’ve been drowning in paying bank charges find a credit card to suit your budget by shopping around. You don’t have to stick to the big four banks to save. Virgin, for instance, doesn’t charge annual fees or monthly service fees.
  3. Don’t replace your items – find out if you’re insured first: Were you broken into or mugged after Christmas? Find out from your bank if they offer theft and accidental cover on purchases. Absa, for instance, offers this on its Platinum card for 90 days after the goods were purchased.
  4. Don’t buy extra travel insurance: If you are travelling abroad pay for your ticket with your credit card so you can access the travel insurance benefit if you need to. Don’t pay for extra cover unless you need to. Insurers won’t cover you if you plan on doing something potentially dangerous on your holiday like skiing off-piste, so make sure you have the right insurance and get top up cover for those dangerous activities.
  5. Don’t buy a warranty from a retailer: You may have this type of cover as a benefit on your credit card. For instance, Absa Platinum offers up to 12 months retailer/manufacturer warranty extension on its Visa cards.
  6. Take advantage of contactless payments: If your credit card offers this then this will help reduce the likelihood of fraud because you never let go of your card to hand it to someone else.
  7. Don’t use the budget facility on your credit card: Using the budget option on your credit card purchase is effectively equivalent to taking out a loan. You are also obligated to make a minimum spend. For instance the Avios Credit Card offers you a budget facility for purchases over R300 and gives you six to 48 months to pay, but the catch is that you are charged interest on this ‘loan’. So don’t use it if you don’t need it.
  8. Transact as much as possible online and set a spending limit: Over the counter banking is the most expensive way to transact. Rather swipe your card, pay online or use your phone app. Being a responsible credit card user and saving money means setting yourself a realistic limit so you don’t feel the urge to splurge. If the credit is not there, you may not be tempted to use it. Setting a limit will also protect you in the event that your card gets stolen.
  9. Retrenched? Your bank may cover some of your repayments: The Avios Credit Card has an ‘Optional Card Life Plan’ which covers the outstanding balance of up to R100 000 in the event of death or permanent total disability, and 10% of the average outstanding balance for four months in the event of retrenchment.
  10. Sign up to the reward scheme: Most of the big banks offer reward schemes which award you points or cash-back every time you spend using your credit card. Make sure you make the most of these schemes as it does cost you to join it. If you don’t make money using the rewards or if it encourages you to spend too much then simply don’t join it.

 

 Handy tip: You can compare credit cards through Justmoney.

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