Keep your credit in shape for summer

credit shape

At least 48.4% of credit-active women are in financial distress.

Women are renowned for their love of shopping. Recent statistics from the credit bureaus back this up, showing that 48.4% of South Africa’s credit-active women have negative information – such as defaults or failure to make regular repayments – on their credit records.

Robyn Farrell, the executive head of 1st for Women Insurance, says that as an insurer that caters largely for women, she has seen first-hand that women are increasingly finding themselves in financial trouble.

“With summer almost here, and the festive season quickly approaching, it’s time for the ladies to shape up in more ways than one and get their finances in order,” she says.

Using and abusing credit is a vicious circle for many South Africans. The quarterly Synoptic Report by Compuscan highlights the increase in credit use and shows an increase in the number of revolving credit facilities in the higher-balance categories.

The number of revolving loans with a value of R100 000 and more increased by 50% in the fourth quarter of last year.

There has also been a consistent increase in the number of credit cards and store cards with a limit of between R25 000 and R40 000 or more.

On the other hand, the number of credit cards with a limit of R5 000 and under has decreased, which supports the trend that consumers are applying for higher credit limits as a result of financial distress.

Farrell says it is easy to lose track of what is spent on credit and when you use revolving credit to stay afloat, it becomes a precarious cycle.

Develop good habits


Reduce the number of credit cards you own to one. If you can, pay extra into one card until the debt is paid off, then start paying that extra amount into another card until it is also paid off.

2 Don’t use your credit card unless you are able to pay the minimum amount due each month. If you can pay more than the minimum due each month, that’s even better.

3 Choose to pay with your debit card or cash rather than using a credit card.

Never use one credit card to pay your debt on another one.

If you are offered a higher credit limit on your credit card by your bank, think very carefully before you accept it.

If you lack financial discipline, it might be wise to decline the higher credit limit. Having extra credit available is a temptation to spend money that you might not be able to afford to pay back.

6 Set a monthly budget and stick to it. Your expenses should never be more than your income.

7 Keep track of your purchases by retaining till slips and tallying up your expenditure.

8 Never buy food or other necessities on credit.

If you have retail store cards, always pay the minimum amount due and work out a payment plan for yourself so that you are able to pay off the whole balance within six months.

10 Instead of dipping into your credit or using retail store card facilities to purchase larger items, put money away each month until you have saved enough for what you want to buy.

This article was first published in City Press on 20 October 2013.

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