Justmoney discusses the benefits of strategic swiping...

Judging by the number of responses to a recent article on Justmoney about credit cards, it would seem that there are a huge number of South Africans in the market for plastic right now.

I'll tell you straight out: at least half of these applicants won't even pass the affordability criteria — such is the nature of the economy right now. Everybody in debt seems to think that more debt is the answer to their economic emancipation. They'd be wrong, but you already knew that, didn't you?

Let's not dwell on the state of the over indebted for too long though, this is not that kind of article.

This article is for, well, the 'already emancipated'. The kind of person that knows credit cards, if managed correctly, can make cash flow a great deal easier and make month end purchase pressure a thing of the past.

Remember though, I'm talking to the responsible here — not the people who think the minimum monthly amount is an acceptable way to manage your short term debts.

Benefits of swiping strategically

There are a few benefits, other than the blatantly obvious bit where you take now and pay later, to swiping strategically.

Firstly, you don't have to pay a cent more than the cash price for the transaction if you pay it back in full before the end of your repayment period.

Many credit card providers will tell you that this interest free period is 55 days. That's not really the case, however, because the interest free period is merely the time between the transaction in question and the date of your next credit card bill. If you buy something on credit the day after you receive a bill from the bank, then yes, it is likely that you won't pay interest on the transaction for the full period (usually between 50 and 60 days). Great news, if you pay it back in full. But we already established that you'll do this, didn't we? Good.

Secondly, you won't pay swipe fees for that transaction, whereas if you'd used your debit card there is every chance that your bank would have hit you up for a couple of bucks for the privilege of spending your own money.

This won't always be the case, because most banks will have bundle options that allow a certain number of swipes for free. But if you are going PAYT (pay as you transact) and spend around R5000 on the card, you might well be better off buying on credit. And then paying back, in full, at month end (just checking you get the message).

The last of the benefits (and I am sure this is the carrot that got you in the first place) is that you could well qualify for some great rewards. Or airmiles. Or rubbish rewards. But you'll get something towards something that'll end up costing you nothing. Which is nice, if you think about it that way.

Article continues on page two...

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