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Things I have learned about owning a credit card

 If anyone told you that the system was created to trap you, they are lying.

There are so many ways to use a credit card and build a credit score while you're at it. When you work in retail, you'll find the smartest individuals paying the minimum instalment amount on their accounts, then purchasing for that amount or more and still ask "Why is my balance not decreasing despite me paying every month?". I don't always feel like explaining the obvious, and I am not obligated to do that either. Anyway. Here are the few things I learned while using the credit card issued to me:

A credit card is an ongoing loan. Everything you are purchasing on that card is purchased with money you are borrowing from the bank. Don't be mistaken; everything you buy using the card is yours. You just have to make sure you pay it back.

Let interest accrue a bit. It's better for your score if you let interest accrue. Doing that gives banks and other credit institutions know that you are worth lending money to. The credit rate currently is 21% pa, so divide that by 365 days and do some calculations on your average balance throughout the month and you will know what the interest for the month will be.

There are several pay-off options. You'll find that there are straight and budget options either prompted on the card machine or on your banking app. Use those to your advantage. Don't be scared to play around with them while your balance is low.

Keep your credit usage below 30%. This is just to assure credit institutions that you are not relying too heavily on credit. It will ensure that your credit score increases steadily, without any hinderances.

Do not pay off your balances before your bank gives you a snapshot of your account or lets you know what your total due or instalment for the month is. Your bank needs to know that you are actually using the account, so make sure you keep the balance until the statement is generated.

This is all necessary to keep building that credit score. A credit score is also determined by your earnings and being able to prove that you actually get those earnings, so your bank will access your statements for that proof.

If you are rich, use: Investec

Moderately rich: Discovery Bank

Middle-class: Nedbank/ABSA

Average South African: Capitec/FNB

Broke AF: Tymebank

Do not use any form of credit if you are unemployed or get government grants. If you have unpaid credit, pay minimum amounts or consolidate the credit if you are able to.

Well, that's it for now. Peace out.

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