Interest-free days and interest amounts – what are the limits?

By Harper Banks

When you open a credit card account with your bank, you will receive certain benefits based, in part, on your credit profile.

The number of interest free days and the interest rate are among the credit conditions that will apply. But what are the limits, or maximum amounts, of these figures?

Tip: Sign up with CreditSav to see how you can improve your credit profile.

How many interest-free days are allowed?

According to Sarah McLoughlin, growth head at FNB Credit Card, a period of interest-free borrowing applies to all credit card accounts, at the discretion of the banks. FNB, for example, offers an interest-free period of up to 55 days.

However, she explains that certain transactions, such as cash withdrawals, will attract interest immediately. Furthermore, only customers that settle their outstanding balances in full will qualify for the interest-free period.

McLoughlin advises customers to carefully review the terms and conditions relating to the interest-free period attached to their credit card. There are no regulations which restrict or govern the interest-free period, so this could differ from bank to bank.

What’s the maximum interest that can be charged?

In contrast, McLoughlin says, the maximum interest rate that can be charged on credit cards is limited by the National Credit Act (NCA). The calculation is based on the repo rate plus 14%.

“The current maximum interest rate charged is 17.50% (repo rate of 3.5% plus 14%). FNB offers customers a personalised interest rate based on their individual profile. This rate could be as low as prime,” says McLoughlin.

READ MORE: Reasons to get your first credit card

Besides considering the number of interest-free days and the interest rate that’s attached to a credit card, McLoughlin also suggests considering the following:

  • The functionality available to you to easily manage your credit card. The ability to cancel and replace cards, and views PINs and statements on a banking app, are important.
  • Additional convenience and security features, such as virtual cards, and the ability to easily report fraud and dispute transactions.
  • Rewards and benefits offered, such as participation in rewards programmes and travel benefits, such as access to airport lounges and travel insurance.
  • Fees, such as an initiation fee, monthly facility service fees, and monthly account fees.
  • Digital payment capabilities such as Apple-, Samsung-, Garmin-, and Fitbit Pay.
  • Personalised interest rates.
  • Budget facility terms.
  • The appropriate limit for your income and risk profile.

You can apply for a credit facility with MobiCred. Click here to find out more.

Recent Articles

Featured When to trade in your old car for a new one

You may have noticed that your car isn’t running as smoothly as it used to. This is particularly concerning if you’re hoping to sell it at a reasonable price, and buy yourself a modern alternative.

3 facts to consider when cancelling your contract

If you’ve ever had a relationship end in a bit of a mess, you’ll know that some people are more difficult to break up with than others. The pain, the push back, the back and forth – it can be a difficult process.

How long does debt reflect on your credit score?

If you’ve ever had debt that you didn’t manage well, you may have wondered how long the debt would remain, or be retained, on your credit score. This is known as a “retention period” and it is governed by the law.

Deals

Full Body Massage at Dembalicious Spa

Price: R99
When: Mondays to Sundays
Where: Johannesburg

Two-Course Asian Dining for Two

Price: R269
When: Mondays to Sundays
Where: Cape Town

One-Hour Yacht Cruise with Waterfront Charters

Price: R99
When: Mondays to Sundays
Where: Cape Town


Latest Guide

Guide to debt rehabilitation solutions