How fantastic is that plastic?

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Pretoria - ‘Your card please…” said the man at the till in Boardmans, holding out his hand. “What card?” I asked. “Your Thank You rewards card,” he responded.

“No, I don’t have one,” I said.

“Okay, you can use your Edgars or CNA one,” he said, showing me examples of them, supposedly to jog my memory.

“No, I don’t have any of those.”

He was completely taken aback, so much so that I remarked on it.

“Is it that unusual for a customer not to have one of those rewards cards?”

“Yes,” he said. “All our customers have them.” Well, not quite.

Frankly there’s a limit to how much plastic a purse can carry.

I worked out afterwards, that by not presenting that particular piece of plastic, I missed out on a reward of R1,60 for my R160 purchase.

What rewards cards do for the companies that issue them is provide them with all our personal details, and the ability to track our purchases, as well as encouraging our loyalty in the form of greater spend – everyone loves a freebie.

To me, signing up for a rewards programme offered by one’s bank is more appealing.

They have all your personal information already and the ability to earn rewards points is not restricted to particular stores.

This time five years ago, I used my bonus to settle and close all my store card accounts, leaving just one credit card as my sole means of credit.

It’s one of the best financial decisions I’ve ever made.

In cutting up those cards, I also severed not only my financial ties with those companies, but my emotional ones, too.

If you feel less connected to a brand, you spend less on it. Or in it.

The other thing about consolidating your debt into a single credit card account is that you can’t spread your debt between a handful of store cards and kid yourself about what you really owe.

So it forces you to become more responsible about your spending.

Best of all, I now pay a lot less interest on what I owe.

Store card credit is the most expensive form of card credit: most charge 21 percent annual interest – the maximum prescribed by the National Credit Act.

Interest rates on credit cards, on the other hand, can be as little as 8.5 percent, going up to 21 percent .

My bank’s gold card interest rate band ranges from 13.5 percent to 18 percent, with those who got their cards before the National Credit Act came into effect in 2007 benefiting from a rate 2 percent lower.

Which brings me to the results of a survey conducted earlier this month by personal finance website, Moneybags, the sister website of Justmoney.

Its people asked questions of store card promoters who’d set up tables in 10 Cape Town stores in the run-up to the festive spending spree.

For the second year in a row, the researchers found that many weren’t well informed about interest rate charges or what people could expect in fees to open the store card.

“Seven out of 10 promoters didn’t know what the interest rate charges were on the store cards, or quoted the incorrect rate,” said Moneybags editor Angelique Ruzicka.

“And very few correctly stated what the fees were for opening the accounts.

“Some stores charge a card maintenance fee and initiation fee and ask you to take out card protection insurance, which they say is compulsory.

“So on top of paying interest – usually 21 percent – you could pay as much as R178 in fees, depending on how you use your card,” Ruzicka said.

I agree with her advice that store cards should be avoided completely by those who aren’t good at managing their money.

“Some have six month revolving plans that don’t charge you interest on your balances, but if you don’t pay your outstanding amount off within six months then you will be charged interest,” Ruzicka said.

“Moneybags is calling on stores to clearly show what their rates, charges and insurance costs are alongside any deals that they promote,” she said.

“If consumers are more informed, they will be able to make better decisions in the way they manage their finances.”

Absolutely. Transparency is key.

And speaking of costs: remember, if you don’t pay at least the minimum amount payable on your credit card or store card statement, or you pay after the due date, even by a day, you’ll be charged a penalty and get whacked with interest on the entire outstanding amount. - Pretoria News


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