How to use your credit card wisely and avoid becoming overindebted 

To stay in control, avoid cash withdrawals, fuel purchases, and overspending, especially when using rewards programmes or preloading your card. Be cautious of short-term promotional offers, limit the number of cards you own, and never max out your credit limit. It pays to understand credit utilisation, credit score improvement, how to manage multiple cards, and what to do if you miss a payment. If you’re struggling with debt, seek help from experts like DebtBusters.

While avoiding debt is sound advice, using a credit card responsibly can offer financial flexibility for emergencies, such as replacing a home appliance or servicing your car.  

This article unpacks how to choose and use a credit card wisely, avoid high fees, and even how to use your credit card to benefit financially. 

How credit cards work 

When you swipe or tap your credit card, your bank sends the money for your purchase to the merchant, and the amount is added to your credit card balance.  

You’re expected to pay at least the minimum amount of your credit card balance required by the due date. Failing to do so will trigger interest charges and potentially late payment fees.  

You’ll get a monthly credit card statement – or can view your transaction history and statement online – itemising your balance, minimum payment, and due date. Paying in full is best, while paying only the minimum prolongs your debt and results in interest charges on the remaining balance. 

Most South African credit cards offer up to 55 days interest-free credit, but this maximum period only applies when you pay your full statement balance by the due date each month.  

The actual interest-free period varies, depending on when in your billing cycle you make purchases. Purchases made early in the cycle get closer to the full 55 interest-free days, while those made near the statement date may get significantly less.  

If you pay only the minimum or miss a payment, interest begins accruing on your entire balance.  

To stay in control, it’s important to understand how purchase cycles and billing work – and remember that only some credit card holders benefit from the full interest-free period offered by their cards.  

Choosing a credit card that suits your needs 

There’s no one-size-fits-all when it comes to credit cards. The card you choose should align with your lifestyle, spending habits, and financial goals.  

Consider these common credit card types and features when making your decision. 

Credit card rewards: Credit cards with rewards features will allow you to earn points, miles, or cashback on purchases.  

Balance transfer features: This may allow you to transfer your personal loan or credit card debt from other banks to your new credit card, often with promotional rates (such as 0% or reduced interest) for a specified period (anything from three to 12 months).  

Secured credit cards: These are ideal if you’re trying to build or rebuild credit. You make a deposit that serves as collateral, and account activity is reported to credit bureaus, helping you improve your credit score through responsible use.  

Student credit cards: These are tailored for students with limited credit history. In some cases, card holders will need to have a minimum monthly income or allowance. Students must be registered full-time with a Further Education and Training (FET) college or South African Qualification Authority (SAQA)-approved institution.  

Business credit cards: These help manage business expenses and provide business-specific benefits, such as rewards, extended credit terms, and supplier payment facilities.  

Travel credit cards: These cards typically offer perks such as airline miles, hotel discounts, and travel insurance. 

The best way to use your credit card 

1. Choose your credit card wisely and make sure you can afford the fees 

Research credit card costs, including monthly fees and initiation fees, and compare them to find the best deal.  

Interest rates are personalised and can vary, but should not exceed the stipulated 21.5% per annum for credit facilities, as per the National Credit Act.  

When you choose a credit card, ensure you can use it responsibly. Avoid overspending as it’s easy to get into debt. 

2. Pay your credit card bill on time 

It’s essential to pay your bills on time. Paying late can impair your credit score and incur penalties, which may mean you’ll be unable to take on further debt. This could have an impact on your financial future. 

3. Understand if there’s an interest-free period on purchases 

The interest-free period is generally 30 to 55 days, depending on when you bought the item and which bank you’re with. Your bank should be able to explain interest-free periods and billing cycles to you. 

If you have difficulty keeping track of your card’s billing cycle, ask your bank to organise a debit order for your credit card payment to go off before the interest-free period ends. 

4. Pay your full credit card balance before the next billing cycle starts 

Many people don’t take advantage of this benefit, but paying off your full credit card balance can save you from paying higher interest. 

When you pay your full balance by the due date, you maintain your interest-free period. This means you're essentially getting a free short-term loan on all your purchases. 

5. Know if you will pay interest from day one on certain purchases 

Some transactions are excluded from the interest-free purchase window and are treated as cash advances. These include fuel purchases and transactions made abroad.  

Drawing cash from your credit card account will incur interest from the withdrawal date – there is no grace period, and you will typically pay a withdrawal fee too.  

Avoid using your credit card in these instances, but if you have no choice or intend to use your card to benefit from rewards points, then preload your credit card with money first to avoid paying the interest. 

6. Don’t fall for rewards points if you don’t need them 

Remember, credit card rewards are there to encourage you to spend more.  

Don’t just look at rewards points – compare annual fees and interest, too. Cards offering rewards often incur higher interest or fees, and only really pay off if you can clear your balance every month and avoid the interest.  

If you’re unlikely to be able to pay off your credit card in full each month, rather opt for a low-interest card without rewards. 

Essentially, you should choose a card that suits your habits and way of life – for example, don’t pay for travel perks if you rarely travel. And definitely don’t upgrade your lifestyle if you can’t afford to, just because you have a credit card. 

7. Use your credit card like a debit card 

Some banks don’t charge you point-of-sale charges on your credit card, but they do on your debit card – and these can be as high as R3 to R4 per swipe, although this is uncommon.  

One way to avoid these charges is to preload your credit card and use it like a debit card. If you do this, remember to keep careful track of your spending and top up your credit card account with more money if need be, to stay in credit.  

8. Don’t max out your credit card 

Budget wisely and don’t use your entire credit limit. Calculate what you can afford to pay back each month, and remember that credit cards are really there for emergencies.  

Ask your bank to reduce your credit limit if you find yourself tempted to spend to the max.   

9. Reduce the number of credit cards you have 

The fewer credit cards you have, the better. It’s too easy to use one to pay off the balance on another, and this can quickly lead to your debt snowballing.  

Fewer cards make it easier to track your spending and harder to give in to temptation.  

10. Don’t fall for special offers too easily 

Credit card providers often try to entice new customers with promotional offers, such as low introductory interest rates.  

Be aware that promotional rates generally expire within six to 12 months, after which time the bank’s standard interest rate will apply – and this may be higher than expected.  

FAQs 

1. What’s the ideal amount of credit to use?  

Use less than 30% of your total available credit. This means if your credit card limit is R10,000, you should try not to owe more than R3,000 at any given time. 

Maintaining a credit utilisation rate of under 10% is even better for your credit score. If lenders see you’re not heavily reliant on credit, they’ll know you can manage your money responsibly.  

2. Can I improve my credit score just by using a credit card? 
Yes. If you use your credit card responsibly, pay on time, keep usage low, and hold the account over many years, it can significantly boost your credit score. 

3. Should I close old credit cards that I don’t use? 
Usually, no. Closing old cards can reduce your credit history and lower available credit, which can hurt your score. 

4. What happens if I miss a credit card payment? 
You’ll incur late fees and possibly higher interest, plus you’ll damage your credit score. Always pay at least the minimum by the due date. 

5. Is it okay to have multiple credit cards? 
If you choose to have more than one credit card, ensure you can manage them responsibly. Multiple cards mean higher available credit and lower utilisation, which can improve your credit score in principle. However, it is tempting to spend and easy to become overindebted. DebtBusters statistics show that 75% of new debt counselling applicants regularly rely on credit cards. 

Need help managing your credit card debt?  

Talk to us today to find out how we can help you manage your debt