With the well-known RCS Cards and banks that now offer credit cards with the festive season in mind we offer some tips.
Credit card debt is something you should avoid but that doesn't mean that you should avoid using credit cards. In fact, there are a number of benefits to using them, including the chance to build your credit profile, and the opportunity to earn valuable rewards.
The important thing is to use your credit card as if it were a debit card.
That means not spending more money than you have, and not carrying a balance month-to-month by just paying the minimum amount, which incurs interest fees the next month. Instead, you should pay the balance off in full every month, which not only helps you avoid interest, but also means that you don't end up overspending and winding up in debt.
So why not just use your debit card?
Credit cards offer more robust fraud protection, and offer a degree of separation from your checking account, which serves as an added safety measure.
Debit cards are connected directly to your bank account. Whenever you make a purchase funds are drawn immediately from that account and transferred to the merchant. In that way, it's like an electronic check and in some instances even blanko check.
If a thief gets hold of your card, either the physical card, or just copy your information off of it, and goes on a spending spree or makes a withdrawal, you lose the cash in your bank account that the person spends and the money disappearing from your bank account.
While most banks and debit card processors offer at least basic fraud protection, if not more, you may not get the cash back right away, particularly if it takes a long investigation.
With a credit card, however, money in your bank account isn't touched until you pay your statement. If someone steals your number and makes fraudulent charges, you can flag them for the card issuer, and you won't have to pay them. The card will be frozen pending an investigation into the fraud so you don't have to worry about losing cash and everything associated with that.
Just make sure to always pay off your full credit card balance so that you don't end up in credit card debt, or paying interest. Even with a low APR, the costs of interest fees will more than outweigh any rewards you can earn.
To build your credit history
Everyone has a credit profile, which is kept by credit reporting bureaus. This profile contains information about every loan you've applied for, held, and paid. All of that information makes up your credit score.
Your credit score is positively affected by things that show a history of using credit responsibly, such as a history of on-time payments, having held multiple accounts, not having too much debt, and having held access to credit for a long period of time. On the other hand, it's negatively affected by things like missing a payment or being late, or not having much history of holding credit.
When you use and pay a credit card every month, that adds another positive data point to your credit profile, which, in turn, helps build and raise your credit score but using a debit card, on the other hand, doesn't affect your credit history at all.
If you anyway want a credit card try RCS Cards to see whether you quality or not.
With RCS Card shopping is made easy. Providing access to South Africa’s biggest independent shopping network of over 21 000 stores.
With RCS Cards customers get affordable monthly installments, with flexible payment options, Revolving facility, 24 or 36-month budget plans and best of all access to exclusive offers and promotions.