Choosing and using a credit card in South Africa

A credit facility under the NCA

Cards fall into the credit facility category of the National Credit Act. With the SARB repo rate at 7.25%, the maximum rate reaches about 26% a year, charged on any balance that is not repaid by the due date.

Up to 55 interest-free days on purchases

In-store or online purchases paid in full by the due date cost no interest at all. Cash withdrawals at an ATM, on the other hand, attract interest from the day of the withdrawal and carry their own specific fees.

Credit limits and the affordability assessment

The bank sets the limit based on net income, expenses and the applicant's TransUnion profile. A limit increase offered by the bank must be accepted by the cardholder, who can also ask for a lower limit at any time.

eBucks, Vitality and Absa Rewards loyalty schemes

South African banks compete through their reward programmes: eBucks at FNB, Vitality Money at Discovery and Absa Rewards at Absa. These benefits, based on monthly spending, never make up for interest paid on a balance carried over from month to month.

Monthly fees and card charges

Every card has a monthly fee, sometimes included in a bundled account package. Premium cards add access to airport lounges at OR Tambo or Cape Town, but they require a high annual income from the applicant.

Minimum repayments: a classic trap

The statement shows a minimum payment that is small compared with the balance. Paying only that amount drags the debt out for years; it is better to set up a debit order covering the full balance or a much higher fixed amount.

SIM swap fraud and 3D Secure protection

SIM swap fraud targets the one-time passwords sent by text message. South African banks are moving approval into their apps and SABRIC publishes alerts; no bank employee will ever ask for a code over the phone.

Credit cards and the January school budget

The start of the school year in January, including uniforms and stationery, weighs heavily after the holidays. Before putting everything on a card, look at the options for school fee loans in South Africa and the existing fee exemptions.

Turning a card balance into a loan

A large balance charged at the card rate costs more than a well-negotiated amortising loan. Our guide to personal loans in South Africa explains when consolidating card debt makes sense and under which conditions it pays off.

Store cards: Edgars, Mr Price, Woolworths

Store cards from South African retailers work like credit cards limited to one chain. They make it easier to get credit for a first application, but they quickly add to the number of open accounts at the credit bureaus.

Using a credit card when travelling abroad

When you pay in euros or dollars, the bank converts at the day's rate and adds a foreign exchange commission. The card is still useful for a car hire or hotel deposit, which is often refused on a debit card.

Rand cards versus Seychelles rupee cards

Seychelles, another SADC member, has a much smaller card market denominated in rupees. Our guide to credit cards in Seychelles describes the differences in limits, fees and acceptance compared with South Africa.

Getting a credit card in South Africa

1. Check your free credit report and close unused store accounts before applying.
2. Compare monthly fees, rates and reward schemes on cards from the big four banks and Capitec.
3. Apply in the app or at a branch with your payslips and bank statements.
4. Choose a modest starting limit, even if the bank offers more after the assessment.
5. Activate the card, set up notifications and arrange full repayment by debit order.

Cost breakdown of a credit card in rand

Documents needed for a card in South Africa

• Smart ID card, or passport with work permit
• Last three payslips
• Three months of bank statements
• Proof of address less than three months old
• SARS tax assessment for non-salary income

Misusing a South African credit card

• Paying only the minimum shown on the statement each month and letting a balance charged at nearly 26% a year keep growing.
• Giving a one-time PIN to a fake bank consultant who calls about a suspicious transaction.
• Drawing cash at an ATM with the card, which triggers fees and interest from the very first day.
• Accepting every limit increase offered, which reduces how much you can borrow for a future home loan.
• Opening several store cards at once to get discounts, which multiplies the accounts on your credit file.

Lenders to contact

• Capitec Bank: South African retail bank offering credit to individuals, including home loans for buying property, with applications available through an online process.
• Standard Bank South Africa: Major South African commercial bank providing borrowing solutions to individuals, notably vehicle finance through instalment sale agreements and personal loans.
• Land Bank (Land and Agricultural Development Bank of South Africa): South African agricultural development bank providing finance and loans to farmers and agribusinesses across the country's farming and food sector.
• Capitec Bank: South African retail bank providing credit solutions to individuals, including personal loans and credit cards, through its personal banking offer.

What to know about rand credit cards