Here are 4 ways to use credit smartly in 2021

By Opinion Time of article published Jan 26, 2021

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If your New Year’s resolution was to make smart money decisions then Capitec Bank’s boot camp should be your go-to guide. Partnering with Financial Fitness Bunny Nicolette Mashile and Personal Finance journalist Maya Fisher-French, South Africa’s largest digital bank brought South Africans a nine-part series on gaining good credit habits.

The boot camp – which featured on Mashile and Fisher-French’s sites – asked South Africans to complete the hash tag #LivingBetterStartsWith… with a financial goal. Close to 700 000 people engaged. The financial influencers then created educational content based on these credit goals.

Fisher-French says, “Taking on credit is a big decision; you need to be informed. Ask yourself whether you’re borrowing money to improve your life. Is there going to be a return on what you’re borrowing money for? Will it help you build a better future and achieve your dreams?” If so, then it’s good credit. Bad credit does the opposite.

This New Year make smart money decisions to achieve your goals. Here are the top four common goals many South Africans share:

1. Paying additional funds towards your home loan

Tip: Fisher-French believes that the quicker you can pay off outstanding amounts on your property, the better for your finances. “If you can, try to pay it off sooner. The longer the time frame, the more you may pay,” she explains.

2. Choosing the right credit option for you

Tip: Mashile says a common problem she comes across is people not realising that there are many different credit options. “They often choose the wrong credit for what they need. A personal loan isn’t the only credit facility available. Speak to your bank to find out which type of credit will suit your individual needs,” she says. Ultimately, your choice should form part of a larger financial plan to manage your money. Think of credit as being part of wealth building; using it should be an asset to you and help move you forward financially. Fisher-French gives the example of using credit to pay for a home – an asset that should increase in value.

3. Paying off clothing account debt

Tip: The best way to manage debt is to repay it. “There’s really no big trick,” says Mashile. “The benefits of paying it off will be to your advantage in the long term. Doing this will help you build a good credit report that proves you can responsibly manage your finances. Plus, the quicker you pay it off, the more you save in interest and costs. Remember, credit is not the enemy, bad credit habits are.” A good place to start is to look at which interest rates are the highest then pay these off first. For example, store credit is usually quite expensive, whereas clients can get a Capitec credit card with a limit of up to R250 000 from prime.

4. Making some positive moves for your future

Tip: Credit can help you to achieve your dreams. Using credit to study further is a good example of this. When you use credit such as an access facility, for the right reasons, it can positively impact your life. Capitec’s Access Facility is revolving credit that could give you access to up to R250 000 to repay over a period of up to 60 months. It places you in control: you decide how much you want to use and – to make sure it fits your budget – you choose the repayment amount or period. You only pay for it when you use it.

Once you start planning and spending wisely, you will reap the rewards.


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