SA’s best credit cards

By Julius Cobbett

SAA’s Voyager Card and Discovery’s credit card have come out tops in a survey that profiles the value offered by South Africa’s credit cards. The survey is the second conducted by Razor's Edge Business Intelligence, an independent research house that specialises in loyalty schemes.

Razor’s Edge assessed each credit card on the value it offers users in terms of rebates and loyalty points. It evaluated 99 different cards, each of which had a unique combination of: card issuer (eg, FNB, Edgars, SAA), product profile (eg, Platinum, Gold, etc.) and card association (eg, Visa, Mastercard).

Cards were evaluated according to how they fared for different income categories. For example, a card that costs R1600 a year is only worthwhile for a top-level earner who would be able to channel enough money through it to make sure that the benefits outweigh the costs.

A distinction was also made between so-called “standalone” cards, which are open to everyone, and cards that require the user to be affiliated with a particular product, such as Discovery whose users must subscribe to its medical aid scheme.

The full set of accolades awarded in the survey is as follows:

Overall, the best standalone winner is SAA’s Voyager Premium credit card. Razor’s Edge MD Bruce Conradie explains that the benefits offered by this card in high-income categories exceeded its competitors by a healthy margin.

By contrast, there wasn’t much to differentiate the Woolworths Silver card from the FNB Platinum card in the lower-income categories, says Conradie.

Discovery’s card won four out of five income categories in the non-standalone category. The card offers rebates to customers who spend money at its partner stores, which include Exclusive Books, Pick ‘n Pay, Nando’s and Altech. Users also get a discount on their FNB home loan.

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Do you need more than one credit card?

If you currently have one credit card, you may be wondering if you need another card as well. Although one card was enough a while back, you now need more spending power to accompany your higher wages and think another card would be a good idea.

On the other hand, you might have more than one card already and wonder if it is really necessary to have extra cards. Although there is no definite answer, there are benefits and drawbacks of having more than one card. To help you make an informed decision, here are some useful hints and tips about having more than one credit card.

Having greater financial options

One of the main benefits of having more than one credit card is that you can be fairly certain that at least one of your card types will be accepted wherever you go. If you are going to have more than one card, then make sure they are different cards – such as one Visa and one MasterCard. This way, you can be sure that you can use credit in virtually all places that accept some form of credit.

Different features

Different credit cards have different features, and so you might want more than one card to take advantage of this. If you travel a lot but also want cash back on purchases then getting both an air miles card and a cash back reward card might be a good idea. This means you can get the benefits of both features, whilst also having increased spending power.

Keeping finances separate

Another good reason for having more than one card is to keep various purchases separate. For example, if you regularly buy items from the Internet you might want to keep one card specifically for online use. This will allow you to keep track of the purchases online more easily, and make sure that your statement is correct. If you want to keep various expenses separate, then having more than one credit card might be the answer.

Risk of overspending

However, there are dangers to having more than one credit card. The main danger is that you will have the power to spend more money than you can realistically repay, which could leave you in serious debt and harm your credit rating. If you are find it hard to be disciplined with your spending, then it may be better to stick to one card.

Hard to manage your finances

With more than one card, it can be extremely hard to keep tracking of your spending, and you might miss mistakes on your statements. It is better to have all the information in one place so that you can clearly see how much you have spent. Checking different statements can be confusing if you are searching for a specific item or trying to work out your expenditure for a certain period of time.

One card or many?

As to whether you should have one card or a number of cards; it really depends on your individual situation. However, if you can afford to repay the debts on more than one card, then it can be useful to have one in reserve in case one is lost or stolen. However, if you use your credit card infrequently, then sticking to one card is probably best, as it will allow you to easily monitor your expenditure each month.

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ANZ pre-paid Visa Gift Card

By Barbara Drury

What it is Just in time for Christmas, the ANZ has launched a pre-paid Visa Gift Card that works like a gift voucher and looks like a plastic credit card. The cards can be given to friends, relatives, employees and even children, provided they are old enough to sign their name. You choose the amount you wish to give and let recipients choose their own gift anywhere in the world that Visa is accepted.

How it works You can buy the cards from selected ANZ branches or online from the dedicated site, http://www.PrepaidShop.com.au. There is a variety of design. You don't have to be an ANZ customer to buy the cards. Because the cards are a cash equivalent they are issued with a PIN code for security. The code must be activated by the purchaser or recipient before the card can be used.

The recipient can then use their gift card anywhere Visa is accepted electronically - over the phone, the internet or the shop counter - but they can't be used at ATMs to withdraw cash. In a retail outlet, recipients will need to sign as they would with a credit card.

Jenny Fagg, ANZ managing director consumer finance, says the cards are available in 22 branches so far but expects this to increase.

What it costs You pay a flat fee of $6.50 via the web or $6 at a branch on top of the face value of the gift card. The minimum face value is $25 to a maximum of $500 on the web or $1000 from a branch.

Pros The prepaid gift cards should appeal to parents who want to give their children money to travel within Australia or overseas.

Garfield Wright, a Cannex analyst, says the ability to use the card online means grandparents, for example, could give one to a grandchild to download music. They may have the edge over gift vouchers, for example, if the recipient lives in another area or town and you don't know which retail outlets they use.

Fagg says overseas companies use the cards to reward employees but at this stage ANZ is promoting them simply as gift cards.

The gift card is easy to purchase, can be sent direct to the recipient with a personalised greeting and is more flexible than a voucher.

Cons The gift card may look and feel like a credit card but it is like cash in the hand - so if it is lost or stolen you can kiss your cash goodbye. The PIN code is protection against the card going astray in the post before it reaches the intended recipient, but there is no security once the card has been activated.

The cards must be used within 12 months of issue and, while Fagg says overseas experience shows most cards are used in the first month, any residual amount on expiry is forfeited.

In practice, recipients may find, after making their purchases, they are left with a dollar or two on the card that is awkward to spend and can't be cashed out. Fagg says residual amounts can be used as part payment for goods but it is likely that these small amounts will end up in the bank's kitty.

Wright says not being able to top it up or use it to withdraw cash at ATMs are disadvantages, especially when given to someone for the purpose of travel. Also, the card can't be used at merchants or with taxi drivers, for example, who still use the old hand-held machines that take an imprint of your card.

The issue fees, $6.50 online or $6 from a branch, are steep for relatively small gifts. The fee on the minimum purchase of $25 is close to 25 per cent of the value of the gift. For small gifts, a voucher is still more cost effective because there is no fee attached.

Where it fits in Pre-paid gift cards linked to a global credit card network are already extremely popular overseas but only just starting here. Westpac has the MasterCard Gift Card available in all branches but not over the internet, costing $4.95 for gifts of $15 to $800. Travelex has a pre-paid card aimed at tourists that provides access to the Visa network and has access to ATMs.

ANZ's Fagg says the bank's branches and call centres have been reporting that customers want pre-paid cards as a convenient money-equivalent gift.

Cannex's Wright applauds the card's flexibility but says its restrictions make it most useful as a replacement for store vouchers.