Six ways to use your credit card to make better money choices

According to TransUnion, South Africa has 6.6 million credit card accounts, a 2.3% year-on-year increase from 2021.

The reason for this expansion is that the small piece of plastic in your wallet is one of the most powerful financial management tools available to the average person. However, as with any powerful tool, when used incorrectly, it can cause harm.

That’s especially important now, as we put Black Friday behind us and prepare for the Christmas season, followed by all the costs of the back-to-school season.

A credit card can be a very useful financial tool when used responsibly, but if your credit spending spirals out of control, monthly payments and accumulated interest can become a nightmare.

Privesan Naidoo, Executive: Trading Products at Nedbank, shares six ways you can use your credit card to better manage your money, especially at this time of year when many South Africans need it more frequently:

Control your spending: This is most likely the most valuable feature of a credit card. Most people get into debt because they don’t know how they spend their money—and what you can’t measure, you can’t manage.

People who use a credit card for all of their purchases, both online and in person, can track their spending through their banking apps and the dashboards available in these platforms.

Use your card to achieve your objectives: Credit cards are incredibly versatile. Once you’ve determined how you spend your money, make the necessary adjustments to fit your stage of life.

A card, for example, would be a convenient and secure way for a student to receive an allowance and make payments while building a credit history.

Cardholders can use their increased purchasing power to access a greater quantum of rewards that can be used to travel, upgrade, or purchase as they climb the success ladder. Seniors would place a greater emphasis on using their cards to keep their money safe and to make payments quickly and securely.

Make your money last longer: A credit card is essentially a way to obtain interest-free credit for a limited time. During that time, your money can earn interest or provide the buffer you need until your next paycheck arrives.

If you pay the full amount when it is due, you will not incur finance charges, and your credit will be effectively free.

Get your rewards: Some credit cards have better reward programs than others. Look for a rewards program that is easy to understand and use, and that provides genuine benefits.

Simply taking the time to learn about all of the rewards available can result in significant extra cash as well as access to special offers and discounts.

Credit card purchases, for example, can generate points that can be used to purchase or upgrade airline tickets, and certain credit card purchases attract discounts and/or bonus rewards points.

Take advantage of secure, convenient digital payment: Digital payments with a credit card have a number of advantages in terms of convenience and security, and they have served as a driving force for innovation.

Payment can be made instantly using options like Tap and Go or Scan to Pay, eliminating the need to carry or draw cash—a significant benefit in a country with such a high crime rate.

Card fraud has received a lot of attention, but by taking a few precautions, one can continue to transact safely.

Keep an eye out for purchase protection: This is a type of insurance that only some cards provide, and it allows cardholders to make a claim for reimbursement of eligible spend on items that are damaged, broken, or stolen within a certain time after they were purchased with the card.

Your credit card is an extremely powerful tool for acquiring goods and services if used correctly.

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