Joburg - For most South Africans, the festive season is shopping season, and with Black Friday shopping firmly behind us and Christmas shopping upon us, the shopping season looks set to keep retailers smiling all the way to the bank, while the new year can become a nightmare if consumers do not manage their shopping patterns well.
This is the indication from TransUnion and the executive for trading products at Nedbank, Privesan Naidoo, who have warned South African shoppers in time for festive season spending.
Naidoo says a credit card can be both a friend and a foe depending on how individuals make use of this shopping tool loved by millions across the world.
Naidoo has warned South Africans to avoid the January blues and manage their credit cards wisely.
Citing a TransUnion study, Naidoo indicated that South Africa had more than 6.6 million credit card account users, which he says accounts for a 2.3% year-on-year increase in 2021.
“The reason for this growth is that that little piece of plastic in your wallet is one of the most powerful financial management tools available to the man or woman on the street. But, like any powerful tool, if used incorrectly, it can cause damage.
“Used responsibly, a credit card can be a very helpful financial tool, but if your credit spending gets out of control, monthly payments and accumulated interest can become a nightmare,” Naidoo warns.
Naidoo shares six ways in which shoppers can effectively and efficiently make use of their credit cards to manage their money better, especially during this time of the year when many South Africans are having to reach for their credit cards far more willingly and frequently than at any other time of the year.
1. Manage your spending.
This is probably the most valuable benefit of a credit card. Most people get into financial trouble because they don’t really know how they spend their money, and what you can’t measure, you can’t manage.
People who use a credit card for all of their purchases, both online and in person, can track their spending through their banking apps and the dashboards available in these platforms.
2. Use your card to achieve your goals.
Credit cards are astonishingly flexible. Once you understand how you spend your money, make the changes needed to match your stage of life. For example, a student would find a card to be a convenient, secure way of receiving an allowance and making payments while building up a credit history.
As they climb the ladder of success, cardholders can use their increased purchasing power to access a greater quantum of rewards that can be used to travel, upgrade or purchase. Seniors would focus more on using their cards to keep their money secure and make payments easily and securely.
3. Make your money go further.
A credit card is essentially a way to get free credit for a limited period. Your cash can safely earn interest during that period, or it could provide the leeway you need before the next salary cheque comes in.
If you pay off the full amount each time it becomes due, you will not incur finance charges, and thus your credit will effectively be free.
4. Get the rewards
All credit cards have reward programmes, some better than others. Look for a rewards programme that is simple to understand and use and offers genuine benefits.
Just taking a little extra trouble to understand all the rewards on offer can unlock significant extra amounts of cash as well as access to special offers and discounts.
For example, credit card purchases can generate points that can be used to buy or upgrade air tickets and certain purchases made on a credit card attract discounts and/or bonus rewards points.
With our American Express credit card, for example, you can earn double rewards when making purchases.
5. Benefit from secure, convenient digital payment.
Digital payments using a credit card have a number of benefits relating to convenience and security and have been a lever for innovation.
Payment can be made instantly through options such as tap-and-go or scan-to-pay, without the need to carry or draw cash — a major advantage in a country with such a high crime rate. There is a lot of publicity about card fraud, but following a few security precautions, one can continue to transact safely.
6. Look out for purchase protection.
This is something that only some cards offer and is a form of insurance that allows the cardholder to make a claim for reimbursement of eligible spending on items that are damaged, broken, or stolen a specified time after they were bought on the card.
“If you use it correctly, your credit card is an incredibly powerful tool for acquiring goods and services you want,” Naidoo said.
The Star