While we certainly do not want to put a dampener on your festive season, we hope that this short article will help you to manage your Christmas spending patterns in the most efficient way.

In the generous spirit that comes with the festive season we all tend to overspend.  Our credit cards are most often the target of this overspend.  Therefore, managing our credit card spend, particularly at this time of the year, becomes particularly relevant.  Herewith a few thoughts that may help you avoid having to deal with a heavy 2019 credit card repayment program.

  • Avoid using your credit card budget facility to pay for your consumption spending e.g. food and clothing. This spend should be settled in full at the end of the month.  Note that the interest payable on a R 20,000 purchase repayable on budget over one year at 20% interest rate is equal to R 2,224 – a 22% interest cost on your average debt over the year.
  • If you buy using your budget facility note that interest on the purchase starts immediately i.e. on the date of that particular purchase. If, on the other hand you spend “straight” and settle your credit card balance on due date, you will enjoy up to 57 days interest free on that purchase.
  • Avoid paying only the minimum amount each month on your credit card. It is, almost without exception, better to use the budget facility rather than paying off the minimum amount each month.  This is particularly relevant if you decide to purchase an expensive item using your credit card.
  • If you have purchased an item using the budget facility and later decide that you are able to pay off the item in full, on application to your bank you will, in most cases, be able to move the transaction from budget to straight.
  • A credit card offers you the flexibility of being able to change the repayment period and settle your debt early at no extra cost. This compared to buying something on an instalment sale basis with fixed monthly instalments.

Here’s wishing all our clients a happy Christmas and a prosperous 2019 – all without the overspend headache that so often accompanies us into the new year.

 

(With acknowledgement to the Business Section of the Sunday Times for the use of this article – 9 December 2018)