Credit card for the poor

Claims that lending institutions are fuelling reckless lending thus are responsible for the unabating consumerisms in the local economy are unfounded.

Thami Sokutu, an executive director at JSE listed African Bank-which is also SA's biggest micro lender both by revenue and assets says consumerism should also be treated as a symptom of a growing economy.

"As people get swallowed in the mainstream economy, that increases their capacity to borrow because there jobs are enough collateral to enable them to borrow.

"You will be surprised to learn that most of our clients borrow to pay school fee for their families. The notion that people borrow to fund certain excess does not hold at all. It's an unfair blanket kind of assumption to make."

Plethora of credit cards on the market

Whether Sokutu's argument is intended to serve the interests of the local lending fraternity is hard to tell but the plethora of credit cards on the market suggests that institutional lenders will stop at nothing to flood the market with their wares.

Unveiling its credit card offering Wednesday, Sokutu says African bank will revolutionise SA's credit card lending space.

How different African bank's credit card offering is compared to competing products is hard to tell but Sokutu insists that theirs is a product that's been developed to cater for various unique needs of the bank's target market such as instant card issue, special security features and fixed monthly instalments.

"Being the first credit-providing institution to serve SA's 'high risk' credit market has placed African bank in a unique position."

'Fly by night' operators

"We understand better than any lending institution the credit needs of the lower end of the market because we know how credit can play a part in fulfilling a family's ambition and goals as long as it is used reasonably," says Sokutu adding that the lower of this market is rife with "fly by night" operators who prey on the often desperate and financially uneducated.

While the concept of instant card issue is not a new one, as traditional banks have been offering such a service for sometime now, Sokutu argues that African bank is the first to introduce the instant credit card service in this market.

"The difference is on the turn around time from when an application is lodged up to the actual issuing of the card. Other unique features of this card are that customers will receive an SMS notification upon activating their cards, which then advises them of the next repayment date and repayment amount.

"For every purchase in excess of R100, customers will receive such notification."

Punting African bank's credit offering as the best in the market so far, Sokutu says African bank credit card holders will be able to make withdraws through all Saswitch automated teller machines (ATM's) and to also make purchases through all merchants using Visa enabled Point-of-Sale (POS) terminals that have a Visa logo displayed on.