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Cape Town - It’s extremely tempting to max out those credit cards during the festive season - and then worry about having to pay for all the purchases later.
This is unfortunately a very South African phenomenon - we’re among the worst in the world when it comes to savings, according to the South African Reserve Bank (Sarb).
Why not buck the trend this festive season and use some good old-fashioned common sense? It’ll make for a much happier New Year – minus the usual financial hangover.
“If you don’t use your credit card responsibly you could find yourself overburdened with debt, a situation which it’s often very hard to recover from,” warned Arnold Dippenaar, Standard Bank’s head of consumer credit card South Africa.
Here are his top tips for avoiding the festive season credit crunch:
Use your card wisely
Always, as a minimum, pay off at least your monthly expenses incurred on your credit card.
If you pay back your full outstanding balance within 55 days your credit is interest-free.
Interest is charged immediately on credit card cash withdrawals, so try to avoid this by rather using your credit card at a point of sale device.
You will then also not incur any transaction fees when swiping.
For large expenses, you could use the budget facility on your credit card and pay this back over an allocated number of months.
“Remember that smaller repayments over a longer period cost you more in interest, and could limit your ability to use your credit card again.
So always set the repayment period to the shortest time in which you can reasonably manage the repayments,” advised Dippenaar.
Check your balance regularly throughout December (in fact, every month) to ensure you don’t lose track of how much you are spending.
Don’t be tempted to have more than one credit card, unless you are very disciplined about using them.
Budget
Work out what you need to spend during December/January on travel, entertainment, food and gifts and allocate a budget for these.
This is the only way to ensure that you can cover your expenses in January.
If you don’t, you’ll have to change your plans or decide to allocate a certain amount to your credit card or budget facility.
Keep up your guard
It’s also easy to let your guard down at the end of the holidays – either because you’ve done well at managing your budget or because you’ve spent so much that a few more rands won’t make a difference.
Be careful to stick to your plan the whole way through the festive season.
Safety first and some tips
Credit card crime is a reality and vigilance is your best defence against would-be fraudsters.
Dippenaar suggests these precautions to protect your card and your bank balance:
Be wary of "shoulder surfers" – criminals who try to see your pin over your shoulder as you enter it.
Never let a waiter or cashier take your credit card out of your sight.
Never leave your credit card lying around, and if you lose it, report it immediately.
Your pin is your secret – never write it down or tell it to anyone.
Never respond to emails or SMSs requesting your pin or banking details. Banks never send emails or messages of this nature.
It is safe to use your card on the internet, however ensure that you are registered to get a one-time password (OTP) to validate the transaction.
Subscribe to SMS alerts so that you are aware of all activities on your account as they happen.
Check your statements regularly so that you can identify any unauthorised transactions on your account as soon as possible.
Remember to check your credit card expiry date before you go on holiday or travel overseas. You do not want to be stranded with an expired credit card.
Bank sensibly
Understand the charges associated with different banking activities so that you can actively minimise your costs.
For example, you should do all the banking transactions you possibly can online, as this is cheaper than going to a branch.
Remember too that your credit card repayment patterns are important for future credit or loans.
It makes sense to always use your card responsibly and vigilantly and make your repayments before the due date. Remember to budget for your January card repayment.
“Your good credit rating is one of your most valuable financial assets, be serious about maintaining it,” advised Dippenaar.
If you struggle to make repayments on your credit card, speak to your bank immediately.
Resolve to spend wisely all year round
By using your credit card responsibly during the festive season you’ll enjoy your holidays and avoid starting 2014 in financial difficulty.
Many of the sound financial management habits you should be practicing in December apply the whole year around – so make sensible financial management one of your New Year’s resolutions.
This is unfortunately a very South African phenomenon - we’re among the worst in the world when it comes to savings, according to the South African Reserve Bank (Sarb).
Why not buck the trend this festive season and use some good old-fashioned common sense? It’ll make for a much happier New Year – minus the usual financial hangover.
“If you don’t use your credit card responsibly you could find yourself overburdened with debt, a situation which it’s often very hard to recover from,” warned Arnold Dippenaar, Standard Bank’s head of consumer credit card South Africa.
Here are his top tips for avoiding the festive season credit crunch:
Use your card wisely
Always, as a minimum, pay off at least your monthly expenses incurred on your credit card.
If you pay back your full outstanding balance within 55 days your credit is interest-free.
Interest is charged immediately on credit card cash withdrawals, so try to avoid this by rather using your credit card at a point of sale device.
You will then also not incur any transaction fees when swiping.
For large expenses, you could use the budget facility on your credit card and pay this back over an allocated number of months.
“Remember that smaller repayments over a longer period cost you more in interest, and could limit your ability to use your credit card again.
So always set the repayment period to the shortest time in which you can reasonably manage the repayments,” advised Dippenaar.
Check your balance regularly throughout December (in fact, every month) to ensure you don’t lose track of how much you are spending.
Don’t be tempted to have more than one credit card, unless you are very disciplined about using them.
Budget
Work out what you need to spend during December/January on travel, entertainment, food and gifts and allocate a budget for these.
This is the only way to ensure that you can cover your expenses in January.
If you don’t, you’ll have to change your plans or decide to allocate a certain amount to your credit card or budget facility.
Keep up your guard
It’s also easy to let your guard down at the end of the holidays – either because you’ve done well at managing your budget or because you’ve spent so much that a few more rands won’t make a difference.
Be careful to stick to your plan the whole way through the festive season.
Safety first and some tips
Credit card crime is a reality and vigilance is your best defence against would-be fraudsters.
Dippenaar suggests these precautions to protect your card and your bank balance:
Be wary of "shoulder surfers" – criminals who try to see your pin over your shoulder as you enter it.
Never let a waiter or cashier take your credit card out of your sight.
Never leave your credit card lying around, and if you lose it, report it immediately.
Your pin is your secret – never write it down or tell it to anyone.
Never respond to emails or SMSs requesting your pin or banking details. Banks never send emails or messages of this nature.
It is safe to use your card on the internet, however ensure that you are registered to get a one-time password (OTP) to validate the transaction.
Subscribe to SMS alerts so that you are aware of all activities on your account as they happen.
Check your statements regularly so that you can identify any unauthorised transactions on your account as soon as possible.
Remember to check your credit card expiry date before you go on holiday or travel overseas. You do not want to be stranded with an expired credit card.
Bank sensibly
Understand the charges associated with different banking activities so that you can actively minimise your costs.
For example, you should do all the banking transactions you possibly can online, as this is cheaper than going to a branch.
Remember too that your credit card repayment patterns are important for future credit or loans.
It makes sense to always use your card responsibly and vigilantly and make your repayments before the due date. Remember to budget for your January card repayment.
“Your good credit rating is one of your most valuable financial assets, be serious about maintaining it,” advised Dippenaar.
If you struggle to make repayments on your credit card, speak to your bank immediately.
Resolve to spend wisely all year round
By using your credit card responsibly during the festive season you’ll enjoy your holidays and avoid starting 2014 in financial difficulty.
Many of the sound financial management habits you should be practicing in December apply the whole year around – so make sensible financial management one of your New Year’s resolutions.
