Credit Cards Guide

A credit card is a card usually issued by a bank or a financial institution that allows the holder to borrow funds to pay for goods or services immediately and then pay off the amount at a later date. Credit cards usually have a credit limit, which is the amount you can spend on the card in total. Credit cards are useful for the purchase of small or large products or services on a daily basis, or for emergencies, and they're usually safer than carrying around cash.

Credit cards charge interest, which is an amount of money based on how much you owe. This is usually charged one month after a purchase has been made. If you pay off your balance within the agreed time period, you will pay no interest. If you cannot pay off the balance, you will be charged interest on the balance that you owe. A credit card with a lower interest rate makes it easier for you to pay off your balances, as your payment will go directly to lowering the balance rather than paying off the interest. 

When applying for a credit card, remember the following:

• Shop around: Compare various credit cards on offer from various banks and financial institutions to ensure you find the best credit card to suit your lifestyle. If you already have a credit card and you find one that has lower interest rate and fees and benefits useful to your lifestyle, then pay off and cancel your existing credit card and move to the cheaper one. There is nothing forcing you to stay with your current card if a better offer exists. 

• Consider rewards programmes: While most credit cards are often marketed by promising the lowest interest rate, many of them also offer rewards for loyalty of using the credit card, such as frequent flyer miles, money back, free products or vouchers to spend at various retail stores. If you’re interested in a credit card with a loyalty rewards programme, make sure you choose one that suits your lifestyle and rewards that you will actually use, as these cards tend to charge a higher interest rate. 

• It's not your money: Although having a credit card can be convenient, it also comes with a huge responsibility. Remember that at some point you need to pay the money back. Keep an eye on your spending and stick within credit limit. Make sure you always keep up with your credit card repayments, if possible pay off the full balance or at least the minimum amount, to avoid incurring interest and thus more debt.

Selecting and applying for a credit card can be a hard task - interest rates can be confusing or misleading, and important features can be hidden in the fine print. At ThinkMoney, we give you an easy way to compare the cheapest credit cards in South Africa side-by-side, as well as giving you credit card reviews from other ThinkMoney users to guide you in your decision. After you've compared the best products for your needs, apply quickly and easily online.