How to be a smart credit card user

A credit card is not only there to get you into debt. If used in a smart way, it can make your finances easier to manage.

In recent years, high inflation and soaring interest rates have made financial management a tightrope walk for many South Africans and these challenging economic conditions can understandably make you more careful of applying for credit, Privesan Naidoo, executive for Trading Product (card and payments) at Nedbank, says.

“Beyond its role as a payment method, the right credit card can be a powerful tool for personal cash flow management and expense tracking and even a source of valuable rewards. When used wisely, it can actually help you navigate turbulent economic times more effectively and make the most of your finances.”

Naidoo says the key to getting the most out of any credit card is to understand your card’s features and use them to your advantage and in that way, you can turn everyday transactions into opportunities for savings and rewards.

“In challenging times, it is these smart money choices that can make a real difference to your personal financial well-being and ensure that your credit card is a powerful tool in your financial toolkit.”

Naidoo’s tips to harness your card’s full potential include using card rewards and using it as a budgeting tool.

ALSO READ: Your age determines how you use your credit card

Choose a credit card with the best rewards

Make sure your card delivers the best possible rewards, he says. “Choose a credit card that offers rewards aligned with your spending habits and use it strategically to maximise these benefits. The key is to choose a card that offers the most valuable rewards in the least complicated way.

“Then use that card to pay for as many of your expenses as you can and settle the balance in full every month. That way, you earn the maximum rewards without paying any interest.”

Track expenses for your budget

Use your card as an expense-tracking and budgeting tool. Naidoo says credit cards can be powerful allies in tracking your spending, offering detailed statements that categorise your expenses, which can then help you analyse and adjust your monthly budget.

“Using your credit card for most purchases creates a clear transaction trail and when you can access this information immediately using your bank’s digital platform, it is easy to monitor your spending patterns and identify areas where you might be overspending.”

ALSO READ: How to be smart with credit

Lowest fees and interest

Look for the best interest rates and low fees. Naidoo emphasises that in a high-interest environment, finding a credit card with competitive rates from prime is crucial.

“The interest rate on your card can make a significant difference in how much you end up paying, especially if you carry a balance beyond the interest-free period. therefore, it is worth it to shop around for a card that offers a great rate.”

Use your card for travelling

Naidoo says you should make your card the ultimate travel companion as most credit cards offer valuable benefits beyond just convenient, cash-free purchases. Many cards come with a range of travel and lifestyle benefits that can save you money and enhance your experiences.

“When choosing a credit card, look beyond just the interest rates and fees and also consider the additional benefits, like travel insurance and flight and accommodation discounts, which can add up to substantial savings on your travel expenses, making your trip more affordable and freeing up cash to spend on tourist activities.”