Pay less not more

Isaac Moledi

Isaac Moledi

If you use a credit card and have not updated your credit agreements since the National Credit Act came into effect last year, you could well be paying as much as a 3percent debit interest rate than necessary.

Paul Beadle, managing director of, says many people who took out credit cards before the launch of the Act (NCA) could still be paying interest rates regulated by the previous Usury Act.

If the balance is under R10 000, most Usury-Act clients will be paying more debit interest than NCA clients - for the same credit card.

On an Absa Silver Credit Card for example, NCA customers pay 24percent on all balances while Usury Act customers pay 27percent on balances under R10 000.

Standard Bank Blue Credit Card charges NCA customers 25 percent on all balances while Usury Act customers pay 27percent on balances under R10000.

Interest charges on a R9000 balance would be R270 a year higher for the Absa Silver Card holder regulated by the Usury Act compared with a customer using the same card under the NCA rules.

Beadle says this discrepancy shows that customers must keep up to date with the different charges their banks levy, or they will be out of pocket.

"Unfortunately it seems that most banks and credit card providers are not proactively contacting their Usury Act customers to offer them a revised agreement and a better rate under the NCA," he says.

Beadle says people who took out their credit cards or updated their existing credit card agreement after the NCA was introduced would automatically pay an NCA-based rate, which is usually lower for balances under R10000.

He says currently Standard Bank, Absa and FNB have the dual interest rate system in place and Nedbank uses the NCA system.

But changes brought in by FNB and Absa mean that anyone taking out a new credit card or updating their credit agreement will be charged a personalised debit interest rate, which is based on their credit score and financial status.

Says Beadle: "A personalised rate makes it difficult for consumers to shop around and find the best deal because they have to be credit-scored first before they find out what rate they're being offered.

"And if people apply for a number of different cards looking for the best rate, they will get multiple credit checks, which could actually impact negatively on their credit score because it looks as if they are desperate for credit."

But customers could benefit if they negotiate a personalised rate, according to one customer who says: "I was paying 24 percent interest on my old gold credit card and received an offer from FNB of 17,5 percent on a new platinum card, subject to me producing proof of my monthly salary and ID.

"I probably qualified for it anyway, but FNB never contacted me to tell me this or suggested that I reapply," he says.

But when their card division contacted him after he enquired about getting a lower interest rate, they indicated that the personalised rates for existing customers on NCA are always better than the old usury rates.

People must check to see if they can get better rates for their credit cards and bank accounts.

The website has an online guide showing what Usury Act and NCA rates the big four bank credit card providers charge, as well as their personalised rates.

Visitors to the site can also compare cards based on the lowest debit interest rate (what you pay if you don't clear your balance each month), or highest credit interest rate (what you are paid if you have a positive balance).