Many people are tempted to take out a new credit card for the alluring rewards programme, discounts, and cashback opportunities. Most popular credit cards on the market offer some discounts or rewards as a way to appeal to more consumers. For people who use their credit card regularly, as opposed to reserving it for bigger purchases, this can add up to significant savings.
At its core credit providers offer you an incentive for opening a line of credit with their rewards and cash back credit cards. This incentive could be in the form of collecting points that can be redeemed for discounts, selected monthly discounts, or cash back for shopping at certain stores. In some cases, you may even be offered a percentage cashback on any positive balances on your credit card at the end of the repayment period.
Credit cards may offer you financial freedom, but they also require a huge amount of responsibility. If you’re not careful about how you use your credit card you could find yourself buried under a mountain of debt.
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 rewards and cash back credit cards!
The process of claiming discounts, cashback and redeeming points for rewards programmes differ depending on the credit provider. For example, Absa awards points to different financial products and transactions. The more points you have, the higher you are on the tiered rewards system and the more discounts and cashback opportunities you will be offered.
For other credit providers, the discounts themselves may be tiered. This means you earn a discount depending on how much you spend. For example, Standard Banks offers airfare discounts based on your seating class and only with certain airlines.
Most credit providers have a repayment period of between 50 and 60 days. During this period you will not pay interest on purchases made. Be warned that some credit providers may begin to charge you interest based on the transaction date rather than a set cycle of 50-60 days. It is your responsibility to stay on top of payments to prevent interest from accumulating.
Credit providers may charge an additional fee on top of the monthly services to access the rewards programmes. If your credit provider offers several similar financial services, be sure to ask about the additional fees. For example, banks like Absa and Standard bank offer several credit cards for differing income brackets.
Rewards and cash back credit cards can be worth the monthly service fees if you make proper use of these programmes and discounts. When deciding on a credit card, compare all of the rewards and discounts available. How many of these discounts will you use regularly?
Ideally, you should choose a credit card that fits in with your lifestyle and allows you to claim as many rewards or discounts as possible. This should offset the cost of the monthly fees.
Two general factors are taken into account when determining if you qualify for a rewards and cash back credit card. These are your credit history and your income.
Your credit score can be obtained from a credit bureau or the national credit regulator. Additionally, you may need the following documents to accompany your credit card application:
Most, if not all, credit providers will tailor their credit card agreements to individuals earning within a certain income bracket. This is a great jumping-off point for finding the right credit card to suit your needs.
There is a large disparity between income brackets; this allows for tailored financial solutions for a host of consumers from differing situations. On the lower end of the spectrum, for example, you have to earn at least R800 a month to qualify for an Absa student credit card. On the upper side of the range, you need to earn a minimum of R62 500 a month to qualify for Absa’s Private Banking Visa Signature Credit Card.
Four of the big banks in South Africa offer credit cards with dedicated rewards programmes. These rewards programmes may not be exclusive to credit card transactions, so you can consider joining if you already bank with one of these institutions.
FNB’s ebucks programme is a tiered system whereby your rewards level is determined by the points you have accumulated that month. You can earn points by making everyday transactions such as fueling up your vehicle, buying groceries, and making health and beauty purchases.
You can use your ebucks to make purchases on other items. Ten ebucks points are the equivalent of one rand. The ebucks rewards programme also offers discounts on international travel and items in their designated ebucks store.
Nedbank’s greenbacks reward programme is based on your money management skills. Credit card users can earn points every time they swipe their card. There aren’t any restrictions on where you shop or how much you have to spend. The amount of greenback points you earn depends on your credit card type. Points can be redeemed to pay for purchases or withdrawn as cash.
Overall, this can be a great programme for people who want to build good money management habits. This programme is not exclusive to their credit cards and you can access different features depending on the financial products you use.
Standard Bank's ucount rewards programme incentivises purchases from their retail partners. This includes a host of retailers from Makro to Tiger Wheel and Tyre. The points and cashback depend on your purchases, for example, you earn R5 back on every litre of fuel purchased from Caltex. You can earn up to 20% of your purchase back.
Your points can also be redeemed at these selected retailers. There is also an option to donate your points to a family member, chosen charity, or a student through the Feenix crowdfunding platform. Alternatively, you can put the cash towards your existing Standard bank loan debt. Although there are restrictions on where you can shop, there is room for significant savings and cashback.
Absa rewards is a tiered rewards programme that offers up to 30% cashback on purchases. This includes everyday purchases such as groceries, fuel, health and beauty products, and purchases from their retail and digital partners. You can redeem your cash back into your Absa account or as retail vouchers, airtime vouchers, or charitable donations.
Amid all the fancy advertising, it’s important to remember that a rewards credit card should ultimately benefit you. It’s easy to think that a credit card agreement is better than it actually is if you haven't done your research.
When choosing a credit card, compare interest rates and repayment periods. Be sure to take note of how and when your rewards points are redeemable. If you aren’t completely sure how your chosen rewards programme works with your credit card, don’t hesitate to ask your credit provider to explain the terms and conditions in simple, everyday language.
Don’t choose the first credit card that’s offered to you without comparing all the important details. The right credit card is the one that offers you the most bang for your buck! Luckily, BudgetGist is here to keep you informed. We are South Africa’s information hub for all things related to finance and money.
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