Credit cards are not a bad thing. They come in handy when transacting overseas, they help facilitate online purchases, and they can also be a financial safety-net for unexpected emergencies.
But to some consumers, credit cards are an easy temptation to spend more and keep on spending.
In 2016, South Africans spent on average R26.2-billion per month on their credit cards, with about R579 spent per transaction (not adjusted for inflation).
Sometimes, I spend money I don't have. And by sometimes, I mean always. #creditcardtrap— Jo Foster (@jo1foster) May 26, 2011
In 2017, the Experian Consumer Default Index found that 14.7-million of the country's consumers were in possession of credit card accounts and home, vehicle and personal loans. The country collectively owed around R1.54-trillion in outstanding debt – and of this amount, consumers had defaulted on R13.6–billion by July last year.
If a credit card is one of your weaknesses and you are already in a tight financial spot, here are a few suggestions to help you manage it better in 2018, according to Debtbusters:
1. Decrease your limit
When you are given a credit card, you will be given a credit limit. You can speak to the bank to decrease your credit limit. In that way, you will manage how much you spend, and on the rare occasions that you max your card, it will be capped at a certain amount.
Having a second one just keeps you in a cycle of debt.
2. Put it away
Don't carry your credit card around in your purse or wallet, as you might be tempted to spend. Rather carry a debit card for everyday purchases and save up for the more expensive things you want, suggests Graham Craggs, spokesperson for Budget Insurance.
3. Cancel it and pay off the balance
If your credit card payments have become the largest part of your monthly budget, it may be a good idea to consider cancelling the card and paying off the balance. This is because interest rates on credit cards are much higher. Have another look at your budget to see where you can cut your expenses, suggests DebtBusters – then use the freed-up money to cover what your credit card covered.
4. Don't get another credit card to pay off the one you already have – or other debts
One credit card is all you need, says debt counsellor Stephen Mulima.
"Having a second one just keeps you in a cycle of debt. Not only will you be easily tempted to use the second credit card, but you won't be making any headway in reducing debt – you will now be paying an additional debt, considering the high interest rates for credit cards."