How to make the most of your credit card
02 June 2017
Meeting month-end expenses can be a daunting task, with an alarming build-up of strained finances and stressful budget re-arrangements. However, many consumers choose to ease this strain with the use of a credit card.
As scary as credit may seem, using your credit card in a calculated and careful way, can prove to be quite a fruitful undertaking, alleviating the stress of any urgent payments. We spoke to Absa Service Centre Consultant, Ilse Venter, about the ins and outs of using your credit card in a smart and responsible way.
How does the ‘up to 57-days interest-free’ period work?
- Most credit purchases (excl. fuel and cash – these attract interest from date of purchase) work on a 57-day interest-free cycle, after which the consumer will be charged interest only for the outstanding balance.
- If the transaction is paid off in its entirety before the end of the 55-day cycle, no interest charges will be incurred at all.
- The 57-day period is comprised of a statement cycle of 30 days and a payment lead-up time of 25 days for partner cards (e.g. Avios, Virgin Money etc) and 27 days for Absa accounts.
- Therefore, if a transaction is processed on the first day of the statement period (you can find this on your statement), the interest-free period of 55 days (57 days for Absa accounts) is applicable. If a transaction is made on the last day of the statement period, an interest-free period of 25 days (27 days for Absa accounts) will be applicable.
How is interest calculated on your credit card?
- Cash withdrawals and fuel expenses are exempt from the interest-free period, as such, both attract interest from the transaction date, up until the date that it is paid off in full. Fuel is seen as a cash withdrawal and cash withdrawals are seen as a loan. Credit cards were originally designed for purchases and not cash withdrawals.
- After this period, interest will then be calculated on the outstanding balance, until such a time as the payment has been made in full.
- Many factors affect your interest rate, including the number of days you take to pay the item off (we offer a budget facility where you can pay instalments over 30 and 60 days if that suits) and the interest rates of your individual purchases. You can easily calculate this amount with the following formula:
How does a business account differ?
- Business credit accounts are a great option when more than one person is using the same account. There is not much difference, except that you can set different users, and limit their credit accordingly.
Any other tips for credit card users?
- Just make sure that credit is available before you make a purchase.
- Make all your payments on time. This will keep your credit rating in good shape. Download the Absa App, allowing you to easily transfer funds across from one account, to another.
- Pay off your outstanding credit card balance as soon as you can. This will automatically lower your overall interest, and leave you with peace of mind.
Benefits of an Absa Credit Card
- Earn Absa Rewards and get paid to swipe, along with a range of other discounts and benefits.
- Travel insurance – book your return flights with your Absa credit card and get automatic basic cover for trips of up to 90 days No card transaction fees when you swipe.
- Up to 57 days interest free period on purchases.
- Contactless payment option for selected purchases.
- Selected products have access to the Bidvest Airport Lounge.
- For a small fee, one can take out life and/or retrenchment insurance to cover the outstanding amount, for extra piece of mind.
- For as long as your account is in good standing, using a credit card will assist with building a strong credit score.
- You can shop online.
- Purchases can be reversed quickly, in certain scenarios - e.g. If a supplier fails to deliver.
- Having a credit card, means you never need to carry cash with you.
Tip: Save the Absa Fraud Hotline to your phone and call us if you have lost your card, or if you suspect any suspicious activity on your account 0860 557 557
Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.