In 3 months in 2004, women bought 2,85 million pairs of shoes for themselves (or something over 3,5 million if you include sports shoes). (Now that's what we're talking about – after all, you can't only have one pair of boots made for walking…)
Get more bang for your buck
We know how wedded you are to that potentially expensive piece of plastic, your credit card. Here's how to hang on to as much as you possibly can. By Heather Parker
Banks are getting it from all sides. First, the state, in the form of the
Competition Commission, is asking some hard questions about the way they levy charges. And then that cheeky Richard Branson foofy-slid in with a Virgin Money credit card, exclaiming that local banking fees are way out of line with international norms. South African banks, he declares, are helping themselves to around R1,5 billion a year from creditcard holders – that's money he can
save us. So what's eating your money?
1. Annual fees. In most developed countries banks don't charge you simply for being a credit-card customer. In South Africa they do. (On entry-level cards, it can be anything from R75 to R145 a year). But Branson is very rude about this (his is free), so watch
this space?
2. Loyalty club fees. Again, watch this space. The idea of a loyalty or a rewards scheme is to make it worth your while to use a single credit card. Yet fees range from R145 upwards per year – money you can certainly put to good use elsewhere. In many parts of the world, charging customers for this is considered to be self-contradictory.
We agree.
3. Transaction fees. Your card provider will tell you the charge for each transaction. Compare this with those of other card providers and if you're not happy, make a fuss. By the way,
that's where the Virgin credit card falls down: as long as you use it as a credit card, it's free. But if you go into a bank and use the card to make a deposit or withdrawal, you'll be slapped with a R30 transaction fee, which is higher than most.
Normally, you'd be looking at an over the-counter cash deposit fee of R2,50 plus with an added 1% of the deposit amount; and a withdrawal fee of around R16 plus 1% of the amount withdrawn.
4. Interest on credit and debit balances. On my credit card, which is kinder than most, the most I could earn on a credit balance is 5% (and I'd need to keep R50 000 in the account to earn that); yet as soon as I'm a day past the payment due date, I get charged 17% on every cent I haven't paid – backdated to the transaction date. Er... something's wrong with that.
Banking ombudsman Neville Melville is on the case, but the people who run the banks say the main issue is that banking, genuinely, is highly complex with loads of variables. We're sympathetic, but we're holding out for a solution whereby the strategists will be able to simplify their packages – or at least explain them more simply.
Until then, keep an eye out for news of the Competition Commission's progress, and let's see how the banks respond to Branson's gauntlet. In the meantime, the advice from the SHOP! team is:
Do the cyber thing as much as possible.
As soon as you handle cash, either withdrawing it from the counter or depositing it – costs will rocket.
When using an ATM, stick to your own brand – your cousin-brands are costly.
Respect the limits and pay off your
credit cards in full, on time, every month.
That way interest on negative balances is
kept to the absolute minimum and you
don't fall into a scary arrears situation.
It's not worth your while keeping a credit
balance, by the way, because the interest
is laughably small. The money would
work far harder for you in your mortgage.
Don't use your credit card as a cash
card – a cash card attracts fewer fees.
If store cards have an interest-free
repayment period, watch it closely, and
pay them off in full before the time is up.
If you have debts, prioritise them in
order of cost. A credit-card debt costs
more than a car-loan debt, for instance.
If you have any extra cash, use it to get
rid of the most 'expensive' ones first.
Speak to your bank about your package
and whether it really is cost-effective for
your needs. Don't do this over the phone;
rather go in, stand in a queue and wait
for a consultant, and ask all the questions,
even the stupid ones.
Give yourself a credit-check
Ever wondered what 'they' look at before deciding whether to grant you that store
card? From this month, you can see yourself as creditors do! In terms of the new
National Credit Act, you can now access your credit records free of charge once
a year (and for a small fee as often as you like). It's not a bad idea to do it – these
records will show loans you've applied for and/or taken out, as well as any records
of instances where you've fallen behind on payments or have received a judgment
against you for bad debt.
It's surprising how many of us simply don't know when we have red marks
against our credit records. You may have moved house and forgotten about an
unpaid bill – and your mail doesn't get forwarded, so you never see the letters of
demand. Or you've disputed something, believed it to have gone away, and aren't
aware that it's just made its way onto your record as a bad debt.
Under the new
legislation, when you request a credit report, the credit bureau has to inform you of
any pending blacklisting. You have a month to sort things out.
It's also worth checking how much credit you ostensibly have available to you.
If you've applied for credit, even if you haven't used it, your ability to afford and
service any subsequent credit will be measured against your current credit options.
This, by the way, is the reason government has clamped down on the practice of
creditors unilaterally increasing customers' credit limits.
You also need to know that the South African financial world is increasingly
concerned about identity theft, that is when someone 'steals' your identity using
forged or stolen documents. If your identity has been stolen there could be several
accounts running under your name, and you'd never know about them until the
thief defaults and the creditors come looking for you; or if you are declined credit
because of it.
The sexy newcomers
There are two new-concept
cards on the market.
Kulula credit card
The airline that broke the SA mould
has just launched a branded Visa
card centred around an innovative
rewards programme – you get
'Kulula moolah' for every rand
spent, exchangeable for flights.
It's underwritten by First Rand and
managed by FNB. You can 'part-pay'
for Kulula tickets with your moolah.
It's treated as cash, so none of the
customary frustrations apply.
Info: www.kulula.com or
(0860 MOOLAH (666 542)
The Virgin card
There are no annual fees, no loyalty
fees, and no interest payable for
the first three months on this
MasterCard-backed 'Blingola'. After
that, there's a competitive interest
rate of 15,75% (other cards start at
around 17%). The card is the first to
offer a flat 5% interest rate on any
credit balance, no matter how big or
small.
The loyalty programme (Virgin
Money VIP) offers discounts at
Virgin Active, Virgin Atlantic, Virgin
Cosmetics, Virgin Limited Edition
and Virgin Mobile. Cardholders
will also be entitled to discounts of
between 10% and 15% at certain
retailers – and the first three to sign
up were Levi's, Primi Piatti and Red
Envelope Adventures.
Info: www.virginmoney.co.za or
(0860 VMONEY (866 639)
In 3 months in 2004, women bought 2,85 million pairs of shoes for themselves (or something over 3,5 million if you include sports shoes). (Now that's what we're talking about – after all, you can't only have one pair of boots made for walking…)
