Your age determines how you use your credit card

Your age determines how you use your credit card, according to a new survey, with 71% older than 50 using their credit cards for convenience and 42% paying their card off monthly, regardless of their financial circumstances. This indicates that older people have learned the hard way how important it is to pay off credit card debt as soon as possible, says the survey.

Digital bank TymeBank surveyed 1,000 South Africans to find out what they do with their credit cards to coincide with the launch of the bank’s first credit card. A total of 6.9 million South Africans own a credit card.

The survey also confirmed results of other surveys that the pandemic made people use their credit cards differently from the way they used it before. This is illustrated by the fact that 74% of the respondents indicated that they use their credit cards now more than ever, primarily due to the pandemic.

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How Generation Z use their credit cards

One of the surprises of the survey was that 46% of Generation Z (between the ages of 18 and 24) own a credit card, probably because the younger generation prefers to shop online.

The survey indicated that 70% use their cards to manage their money and monthly transactions, while 81% use their cards to buy clothing and 37% use their cards to pay for entertainment. They are also less likely to rely on the credit (21%), while 32% of all the respondents do.

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What do people buy with their credit cards?

Looking at what people buy, 63% said they buy big ticket items, such as appliances and furniture, while 46% use their cards to pay for special occasions, 41% use their cards to travel and 24% use their cards for all of these expenses.

The respondents who use their cards to pay for holidays and travel are more likely to if they earn more than R30,000 (65%) and are older than 50 (52%). A total of 24% said they use their cards for most of their purchases, from big ticket items to clothing and treats such as dinner and drinks.

The survey also showed what people look for in a credit card: 77% look for low fees, 61% look for a good loyalty programme, 60% look for competitive interest rates and 56% look for additional benefits. The card’s design is also an influencing factor for 16% of respondents, while 6% said they like the status attached to having a credit card.

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Payment behaviour

Asked about their payment behaviour, 31% said they pay as much as they can each month, while 30% said they pay the minimum required. Only 22% are disciplined enough to pay off their cards in full each month, while 16% pay the same amount every month regardless of the balance.

The survey also indicated that earning more does not necessarily influence repayment behaviour, with only 29% with a household income of more than R30,000 per month paying off their cards in full every month.  

“Whether it is for online payments or instore purchases, there are definite benefits to having a credit card that is used responsibly. It is a secure, convenient method to pay that can add value to your budget and lifestyle,” says Tauriq Keraan, CEO of TymeBank.

He points out that cardholders can bolster their credit scores if they pay on time and in full, which could even help with securing lower interest rates on other forms of credit.

“Due to the current economic circumstances, not everyone can pay their card off monthly, which is why it is really important to think carefully before using your credit card.”

Keraan advises consumers to use credit cards to pay for unexpected costs, big ticket items and special occasions to manage their payments and to remember that they do not incur interest if they pay on time and in full.