We consider credit cards; their features and options, the pitfalls to avoid, and how to choose a card that’s right for you.
Credit cards are a ready source of funds to tide you over in an emergency, or to buy something you need that you can’t immediately afford. However, there are conditions attached to using this form of credit, and running up too high a balance can plunge you into debt.
We explore how to use credit cards responsibly, and compare the cards offered by six South African banks.
Tip: Use this budget calculator to get a better handle on your finances.
Everything you need to know about credit cards
The August 2023 Consumer Default Index from Experian indicates that South Africans are reaching for their credit cards to make ends meet. However, this can plunge consumers into a cycle of debt.
Before using a credit card, or applying for one, it’s vital to understand how the product works and how best to use it.
Let’s start with understanding what a credit card is
A credit card allows you to pay for items or services with funds that belong to the card issuer, which partners with a payment-card processing network, such as Visa, Mastercard, or American Express.
These networks enable you to use your credit card anywhere in the world that the network is recognised.
How does a credit card work?
A credit card gives you access to a pre-approved sum of money, up to a specified limit, provided your account is in good standing.
“You’re required to pay the money back within a set time – all of it, or at least a minimum amount,” explains Tumelo Ramugondo, credit card head at Standard Bank South Africa. “If you’re only paying back the minimum, you’ll be charged interest on the outstanding amount.”
The importance of credit cards, and why they’re beneficial
Francois Viviers, group executive of marketing and communications at Capitec, explains that credit cards typically offer a range of benefits and rewards, as follows:
- Transactional benefits. These include safe and free transactions; rewards linked to spending, such as cashback vouchers; and discounts on swipes and benefits for in-store and online purchases. Credit cards are also convenient, and compatible with e-wallets (e.g., Samsung Pay).
- Insurance benefits. Credit cards often come with insurance benefits, such as credit life insurance, travel insurance, purchase protection, and ATM robbery insurance.
- Travel benefits. Many credit cards offer travel-related perks, such as low currency-conversion fees for overseas purchases, complimentary travel insurance, airport lounge access, and discounts with travel partners.
- Credit benefits. Among these benefits are interest-free periods for purchases, competitive interest rates, the opportunity to build a credit record for future loans (e.g., home purchases), access to credit during emergencies, and structured budget facilities to manage larger purchases with fixed repayment plans.
Building your credit record
Nedbank head of retail trading Thabo Monkhe explains that credit cards are often used as a simple way to build a credit record by establishing a history of making repayments on time.
“Even if you don’t use it often, this record of regular payments helps boost your credit score. It shows lenders that you can be trusted the next time you apply for a credit card or loan. Credit agencies look closely at your debt and how you manage it. One of the factors they consider is how much of your debt you’ve used up,” he says.
“As a cardholder, try to ensure you don’t miss repayments, and at least repay the minimum amount stipulated by the credit company. If under strain, make arrangements with the bank instead of missing repayments.”
Who can get a credit card?
To obtain a credit card in South Africa, you must be 18 years old, have a South African identity document or a valid passport and work permit, provide payslips or stamped bank statements for the previous three months, and submit proof of residence not older than three months.
You must also earn the minimum income specified by the credit card issuer.
Credit card approval is subject to credit checks and Financial Intelligence Centre Act (FICA) requirements.
The credit card application process
Most banks allow you to apply for a credit card via internet banking, their banking app, cellphone banking, or by visiting a branch.
Which bank in South Africa offers the best credit card?
The credit card that’s best for you depends entirely on your needs.
“Choosing an appropriate credit card involves careful consideration of several factors, particularly the benefits and rewards on offer,” says Viviers. These include:
- Interest rates and monthly fees. Evaluate the interest rates and monthly fees associated with the credit card to determine its overall cost. If you don’t intend to repay your credit card in full, determine how much you will pay in interest and fees every month. A high interest rate can cost you far more than the perceived benefit of a “free” monthly reward.
- Rewards and loyalty programmes. Assess the rewards, cashback, or loyalty programmes offered, including partnerships with businesses, to understand the regular benefits the card provides.
- Travel benefits and foreign transaction fees. If you travel frequently, choose a card with travel benefits and low foreign transaction fees to reduce costs.
- Additional benefits. Consider other benefits such as travel insurance, extended warranties, airport lounge access, or concierge services.
- Security features. Ensure the card has adequate security features to safeguard against fraud.
- Credit limit. Check whether the credit limit offered will cover your financial needs and expenses.
- Online banking and mobile app. Consider the convenience of a user-friendly online banking platform and mobile app.
- Terms and conditions. Read the fine print, paying particular attention to any limitations, exclusions, or restrictions that may apply to rewards and benefits.
Credit card comparison
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Standard Bank Gold Credit Card
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Minimum income required
Credit limit
Rates and fees
- Monthly fee: R63
- Personalised interest rates (excluding professionals)
- Up to 55 days interest-free on point-of-sale swipes
- No transaction fees* on point-of-sale swipes
Rewards and discounts
- UCount rewards
- Special discount and cashback deals with participating service providers when paying with your credit card or via selected online portals, including booking.com, Avis, IHG Hotels & Resorts, Rentalcars.com, Emirates, Travelstart, Budget Car Rental, Fiit, Unicaf, Lingokids, Gopals
- Shop from a selection of wines, coffees, olive oils, and more, and get 15%* off at Wine-of-the-Month Club
- Mastercard Gamer Pass to participate in the Go Gamers community.
- Access to handpicked experiences and offers in cities worldwide with Mastercard Priceless Cities
- Access to various offers for restaurants, leisure attractions, spas, and more, on the Mastercard Priceless Specials app
- Free subscription to mobile and online banking
Convenience and control
- Use your budget facility for purchases and cash advances of R200 or more
- Tap to pay functionality at point of sale – no pin required* for transactions under R500
- Make purchases anywhere you see the Mastercard sign
Travel benefits
- Automatic travel insurance when purchasing tickets with your credit card, with cover of up to R1m
Security
- Safe and easy purchases, thanks to secure chip-and-PIN features
- Shop online with confidence with 3D Secure technology, which verifies your details during a purchase
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ABSA Gold Credit Card
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Minimum income required
Credit limit
Rates and Fees
- Up to 57 days interest-free on qualifying transactions
- No monthly fees if taken with Gold package
- Fixed monthly payments: You can pay extra on your monthly instalments if you need to
- Zero fees for fraudulent-transaction disputes
Rewards and discounts
- Rewards members receive up to 30% cash back depending on their reward tier when spending on the following at ABSA partners:
- Grocery spend from Food Lovers’ Market, Pick n Pay, and Woolworths
- Fuel when you fill up at Sasol
- Health and beauty spend at Dis-Chem
- Spend on digital lifestyle vouchers with in-app digital voucher partners
- Earn on your travel spend locally and internationally
- Budget purchase functionality that allows you to personalise instalments for big-ticket purchases
- No currency conversion fees for international purchases in South African rands, such as Netflix subscriptions
- Bidvest Airport Lounge access at preferential rates
Convenience and control
- Exclusive Visa benefits, such as Visa Global Merchant offers
- Contactless payments – tap to pay with your card, smartphone, or wearable device at any point-of-sale machine worldwide
- Swipe, scan, or tap to pay at any point-of-sale machine worldwide
- Shop securely online or in-store
Insurance and cover
- Free lost card protection: You’re covered if your card is lost or stolen, subject to letting the bank know
Travel
- R1.5m automatic basic cover for a range of travel emergencies
Security
- NotifyMe: For added security, activate SMS notifications to get alerts of any activity in your account
- Digital fraud warranty
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FNB Premier Credit Card
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Minimum income required
Credit limit
Rates and fees
- R99 monthly for standalone credit card and R250 bundled with a cheque/fusion card
- Unlimited free swipes
Rewards and discounts
- Earn eBucks as you spend
- Up to R8 a litre back on credit card or virtual card fuel spend at Engen
- Up to 15% back on a wide range of partners, including iStore, Clicks, Checkers (up to R3,000 a month on groceries), ARC Beauty, and iStore
- Up to 40% back on FNB insurance premiums every month
- Reduced interest rates on budget purchases at iStore, The Pro Shop, Cycle Lab, and Koodoo.co.za
- Up to 40% back in eBucks points for monthly Netflix and Spotify subscriptions, when paid from a family- or spousal-account virtual card
- Complimentary weekly Starbucks coffee
- Up to R120 worth of Kauai vouchers every month
- Complimentary quarterly Wimpy burger and breakfast vouchers
Convenience and control:
- Budget facility to purchase and pay later with six to 60 months’ repayment periods for purchases over R200
- Qualifying medical spend can be moved to budget at the prime interest rate
- A wide variety of digital payment options
- Access to the FNB app, including the nav>> feature, featuring financial and lifestyle tools, safe chat functionality through Secure Chat, and the ability to earn eBucks for digital behaviours and payments
Insurance protection:
- Complimentary debt protection cover – up to R12,000 embedded and complimentary cover
- Free purchase-protection cover, and short-term insurance cover for items purchased using virtual card. Claim amounts range between R7,500 and R15,000 per claim for 30 days from the date of purchase
Travel:
- Complimentary global travel insurance covering medical expenses when travelling on an international journey
- Up to R5m in emergency medical and related expenses cover, and cover for travel and luggage delay
- Up to 40% discount on selected domestic and international flights, domestic car hire, and QuickBus when booking through eBucks Travel on the FNB App
- Complimentary access to FNB’s airport Slow Lounges, depending on reward level and whether air tickets were purchased through the FNB app
Security
- Virtual card transactions are a much lower fraud risk thanks to regularly changing, dynamic CVVs
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Nedbank Platinum Credit Card
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Minimum income required
Credit limit
Rates and fees
- Monthly fee from R96
- Up to 55 days interest-free
- R27 optional Greenbacks linkage fee
- Complimentary replacement card
- No charges on card swipes
Rewards and discounts
- 50% off Nu Metro movie tickets
- 25c cash back for every litre of fuel bought at BP with a Greenbacks-linked card
- Greenbacks earned on all eligible spend
- Greenbacks SHOP Card can be used at leading stores that accept American Express
- Exclusive discounts for Greenbacks members, available on Greenbacks Exclusive Store via the Avo SuperShop
- Uncapped earn on Greenbacks-linked American Express Credit Card
Convenience and control
- No card-delivery fees
- Get an additional card for R35
- Manage card with the Money app or online banking
- Tap and go
- Scan to pay using QR codes
- Link card to Apple Pay, Samsung Pay, Fitbit Pay, or Garmin Pay
- Flexible repayment options
- Pay off purchases over time with the budget facility
- Minimum repayment of 5% on outstanding balance
- Change credit limit on request via the Money app
- Use card in-store, online, at ATMs, or abroad
Insurance and cover
- Card includes purchase protection with a chargeback option
- Optional credit life cover should you die, become disabled, contract a critical illness, or get retrenched
Travel benefits
- Up to R3m in travel insurance
- Enjoy Bidvest Premier Club domestic airport lounges up to 12 times a year
- Discounts on car hire from Hertz and Avis with Greenbacks
Security
- Get real-time SMSs for transactions
- Set transfer and withdrawal limits using the Money app
- Block, replace, freeze, and unfreeze your card using the Money app or cellphone banking
- Stop or block your card anytime using online banking, or call 0800 110 929
- Card is chip-and PIN-enabled for added security
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Capitec GlobalOne Credit Card
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Minimum income required
- R5,000 a month (R10,000 for self-employed clients)
Credit limit
Rates and fees
- Initiation fee: R100
- Monthly fee: R50
- Up to 55 days interest-free
- Interest rate: 11.75% to 22.25% (based on your credit profile)
Rewards and discounts
- Up to 1.5% cash back when you spend and bank with Capitec
- Earn 3.5% a year on a positive balance
- Free local swipes
- Interest starts at prime
Convenience and control
- Free credit card delivery
Insurance and cover
- Credit insurance is available if you do not have your own cover
Travel benefits
- Free travel insurance up to R5m
- No currency conversion fees
Security
- Safe and secure online shopping
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Discovery Gold Credit Card
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Minimum income required
Credit limit
Rates and fees
- Monthly account fee: R90
- Once-off credit facility initiation fee: R150 if the limit is less than R2,000; otherwise R185
- 55 days interest-free credit on select transactions
- Optional additional and secondary physical cards: R40 monthly
- Optional Discovery Motor Card: R40 monthly
- Optional additional credit card accounts: R40 monthly
Free benefits
- Optional additional virtual cards
- Health Pay payments
- Prepaid product and service purchases
- Point-of-sale purchases: local and international
- Inter-account transfers
- Balance enquiry at ATM
- Payment notifications
- Own account notifications
- Declined transaction notifications
- Card replacement fee (One free; R200 each thereafter)
Rewards and discounts for Vitality members
- HealthyFood rewards at Pick n Pay or Woolworths
- Up to 4% less interest on borrowing rate
- Cashback on fuel and discounts on Uber rides
Convenience and control
- Full transactional capabilities, including setting up third-party debit orders, EFT payments, and accepting salary deposits
- Easy credit management
- Access to real-time forex accounts
- Purchases worldwide, wherever Visa is accepted
- Cash withdrawals from all Visa-linked ATMs worldwide
Travel
- Discount local and international flights via the Discovery Bank app
- Free international travel insurance
- International cover for emergency evacuation to the nearest medical facility
- Cashback with specified travel experience providers
Security
- Advanced facial recognition technology
- Secure chip-and-PIN technology
- Secure tap-and-go payments
- Safe online shopping with Discovery Bank virtual cards
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*Terms and conditions apply
Managing credit card debt responsibly
Ramugondo suggests taking the following steps to manage your credit card wisely:
- Keep track of your purchases and stay on top of how much you owe the bank.
- Know what your interest rate and credit terms are. Only spend what you can afford to pay back.
- Always pay off your outstanding balance on time to avoid penalties. Try not to carry over balances from month to month, as you’ll be charged interest, and it will become more expensive to pay off those amounts.
- Avoid accumulating too much debt and paying unnecessary costs – use your card for the right reasons and only when needed.
Biggest credit card mistakes to avoid
Monkhe says credit card newbies are often starstruck by the “magic plastic” possibilities. “There is a secret to owning a credit card, and that is knowing when to use it,” he points out.
Monkhe lists the following mistakes and pitfalls.
Missing payments
The biggest mistake you can make on your credit card is to pay late or miss a payment, which can affect your credit score and reduce your chances of getting a loan in future. You will also be penalised and pay more interest if you don’t make up for it.
Paying only the minimum
Paying back the full amount you owe every month is a double win, says Monkhe.
“Firstly, you don’t pay interest if you settle the borrowed amount within 55 days,” he says. “Secondly, using your card in this way means you’re getting better at managing your finances. The faster you reduce the outstanding balance, the more you reduce the total interest you pay.”
“Maxing out” your card
“Maxing out” your card by using up all of your available credit is inadvisable.
The interest for that month, and other charges, will be added to your balance when your statement is issued. If your card is already maxed out, these charges will push your balance over your credit limit, which can result in penalty fees.
The biggest downsides to having a credit card
Having too many cards can be a significant issue, says Monkhe.
“Remember, you’re paying admin fees on every card, and that’s an expense that may not be worth the benefits,” he cautions.
“Too many cards and store accounts can be bad for your credit profile if you struggle to repay them monthly. You also risk a lower credit score if you apply for several credit cards in a short period.”
Tip: Don’t let credit-card and other debt prevent you from reaching your financial goals. Consider debt consolidation.
