Unsuspecting consumers should beware of smart strategies used by credit issuers

Robert Laing

Robert Laing

Credit card issuers have some nasty tricks up their sleeve. Here are six frequently used ploys to avoid.

lThe waiting game

Are you getting inundated with calls by credit cards issuers? That's because they're rushing to sign you up before tougher consumer protection comes into play from June. Wait until the new National Credit Act comes into effect. l Credit not debit card Anyone can get a debit card, but it takes a good credit history and a regular income to get a credit card. With a credit card you don't pay transaction fees and you get up to 60 days free interest. Banks prefer issuing debit cards because they charge you every time you use it and interest clocks up instantly if your account is in overdraft.l Pitfalls of petrol cards Petrol cards have all the problems of debit cards, and are used by local banks to nullify the benefits of credit cards when they link the accounts. Try to keep enough extra cash in your credit card account to cover your monthly petrol costs to avoid interest charges.l Low payment, more painThe minimum amount due every month is calculated to keep you in a debt trap for your entire life. Pay your credit card off in full every month.l Don't draw extra cardsOne of the reasons that you're getting many credit card offers is that retailers and medical aids have started competing against banks in this business. The growing choice is a good account because it allows you to cut your grocery bill by accumulating loyalty points or to get discounts by going to gym regularly. But keep things manageable - pick one card wisely and cancel the rest.l The high cost of goldNew entrant Virgin Money released a study showing that the average yearly fee for an entry-level credit card is R137,28, and the yearly cost for a gold credit card is R189,44. What the study failed to mention was that fraudsters tend to target gold card-holders because of their higher spending limit. Are you getting inundated with calls by credit cards issuers? That's because they're rushing to sign you up before tougher consumer protection comes into play from June. Wait until the new National Credit Act comes into effect.

l Credit not debit card

Anyone can get a debit card, but it takes a good credit history and a regular income to get a credit card. With a credit card you don't pay transaction fees and you get up to 60 days free interest. Banks prefer issuing debit cards because they charge you every time you use it and interest clocks up instantly if your account is in overdraft.

l Pitfalls of petrol cards

Petrol cards have all the problems of debit cards, and are used by local banks to nullify the benefits of credit cards when they link the accounts. Try to keep enough extra cash in your credit card account to cover your monthly petrol costs to avoid interest charges.

l Low payment, more pain

The minimum amount due every month is calculated to keep you in a debt trap for your entire life. Pay your credit card off in full every month.

l Don't draw extra cards

One of the reasons that you're getting many credit card offers is that retailers and medical aids have started competing against banks in this business. The growing choice is a good account because it allows you to cut your grocery bill by accumulating loyalty points or to get discounts by going to gym regularly. But keep things manageable - pick one card wisely and cancel the rest.

l The high cost of gold

New entrant Virgin Money released a study showing that the average yearly fee for an entry-level credit card is R137,28, and the yearly cost for a gold credit card is R189,44. What the study failed to mention was that fraudsters tend to target gold card-holders because of their higher spending limit.

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