As economic conditions continue to worsen for many people all over the world, South Africans have also found themselves financially challenged.
More South Africans are relying on loans and credit cards to subsidise their incomes.
Credit cards in particular are often quite popular because they’re more convenient and affordable than overdrafts. Ideal for financial emergencies or for paying for large items, credit cards also have other benefits.
Instead of having to fork out thousands of Rands when you need to buy something, you can avoid having to carry cash around by using a credit card.
Credit cards are essentially short-term unsecured credit products. You can borrow money up to a set limit. Most credit cards also come with an interest-free period to repay your debt. It’s also important to read your credit card contract carefully before you sign it.
Credit card debt can be a good thing, if managed correctly. Good management of credit card debt can help you build up a credit history which is necessary if you later want to borrow money to buy a house or a car.
If you pay your credit card debt diligently and on time, you could later borrow money at a lower rate of interest.
It’s often ideal to pay monthly expenses on your credit card and to pay the debt off completely before you have to start paying interest annually.
Keep in mind that interest rates on credit cards are much higher. You also need to keep aware to know what fees are involved.
With all the merits that come with owning a credit card, it can be so easy to fall into the trap of accumulating too much debt.
You need to be careful about making various applications for credit cards. Too many credit cards can affect your creditworthiness.
You should also avoid using your credit card to pay off other debts or to buy things that aren’t in your budget.