With all the perks and rewards programmes offered by most credit cards, it can be tempting to use your credit card for everyday purchases. For some people, this could be cause for concern. With more credit card purchases, comes higher interest payments and more credit card debt, right?
Actually, there is a way to use your credit card without accumulating debt from high-interest rates. Interest-free credit cards are similar to most other types of credit cards except that your repayment amount includes only your purchases and service fees. Interest-free credit cards can be ideal for people who are still learning about money management or trying to build a credit score on a budget.
The process of finding a new credit provider can be overwhelming. Financial jargon aside, there are tons of advertising gimmicks and fine print that you have to look out for. After all, credit card debt is something that far too many South Africans are struggling with.
That’s why we pride ourselves on being South Africa’s information hub for all things related to finance and money. Here’s our guide on everything you should know about interest-free credit cards!
Unfortunately, it is difficult to find completely interest free credit cards in South Africa. This is especially true if you are considering getting a credit card from a major bank to access the rewards programme.
The good news is that many credit cards on the South African market are interest-free if you make use of the grace period. This can differ between credit providers, but it is generally between 30 and 60 days. Whilst in the process of obtaining a credit card be sure to check the grace period and if it is subject to change.
Additionally, some credit providers may include terms and conditions with their grace period. You may have to settle the full amount or there may be selected purchases that qualify for zero interest.
Qualifying for an interest-free credit card is very similar to qualifying for other types of credit cards. You will be offered a credit card agreement depending on your credit history and your monthly income.
The required documents and application procedures differ between credit providers. If you’re not sure about how to apply or whether your documents are valid, don’t be afraid to contact your chosen credit provider. They should be willing to guide you through the entire process.
Oftentimes credit providers will tier their financial products based on income. This benefits you as you will likely have access to financial services and perks that are suited to someone in your income bracket.
Many of the major banks in South Africa offer credits that have a grace period when it comes to interest. We've compiled a few pertinent details you should know about South Africa's favourite credit providers.
All of Standard Bank’s credit card offerings are interest-free if you pay your bill within the grace period. The grace period is currently 55 days and your bill has to be settled in full. If you miss the grace period, you will have to pay a personalised interest rate on your credit card balance.
This does not apply to the Diners Club Shari-ah Charge Card or the Diners Club Platinum credit card which are both offered by Standard Bank. The Diners Club Shari-ah Charge Card is an excellent option for people who want to go interest-free or are looking for an Islamic finance option. The Diners Club Platinum credit card has a fixed interest rate.
With Absa Bank, you have a 57 day grace period. Unfortunately, this grace period only applies to qualifying transactions. This means you may have to pay interest on certain transactions even if you settle your bill within the grace period. Be sure to check which transactions qualify for the interest-free grace period and decide if they align with your lifestyle.
Nedbank offers a 55 day grace period on all its credit card offerings. The interest rates outside of this grace period are personalised.
FNB also offers a 55 day grace period after which you will pay a personalised interest rate. However, you can get a preferential interest rate for shopping at selected stores.
African Bank offers an incredible 62 days interest-free grace period. This is higher than other banks and credit providers. Additionally, you can earn interest on positive credit balances on your account.
If you’re looking for an interest-free credit card to keep your costs down, there are a few other things you can do to keep your credit card bill to a minimum. These include:
Even though the maximum interest rate on credit cards recommended by the National Credit Regulator is a whopping 20.5%, there are many credit cards on the market that have higher interest rates. For example, African Bank's silver credit card offers interest rates of up to 27%.
On top of ridiculously high-interest rates, you will also have to pay service fees. All this can add up and make using credit cards far too expensive. For people who need to build their credit score to access larger loans like home loans and car financing, this can be worrying.
Luckily, interest-free credit cards can make using your credit card affordable. There’s no reason why you shouldn’t be able to access your favourite rewards programmes and build your credit!
Remember that the grace period and its terms and conditions are crucial to paying zero interest on your credit card bill. Always check with your credit provider to ensure that your specific credit card agreement has an interest-free grace period. Make a note of the terms and conditions surrounding the grace period, particularly the length and whether you need to settle the full amount or a minimum amount.
Finally, don’t be disheartened if you cannot find a completely interest-free credit card at first. Some banks and credit providers may tuck information about grace periods away in the small print at the bottom of the page; luckily BudgetGist can help you find the right interest-free credit card to suit your needs. We are South Africa’s information hub for all things related to finance and money.
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