Credit cards have increasingly become a part of daily life in Africa. Mastercard reports that as of 2020, they have over 100 million customers in Sub-Saharan Africa. Though this is still below their goal of 500 million, it shows how more people in the region are getting accustomed to no longer using just cash for transactions.
Many people see credit cards as a liability, but if used wisely there are actually many advantages to using them. Here are some ways you can use a credit card to your advantage:
1. Use only one card
Once you’ve been approved for your first card, you might be tempted to keep applying for more, but a past article by Peace Akujuobi notes that this isn’t a good idea. Having just one credit card will make your spending more manageable and will prevent you from going over budget.
It also helps you keep track of how much you actually owe and lessens the chance of you forgetting to pay different bills. This will help you save money in the sense that it will prevent you from being tempted to spend more than you initially intended to.
2. Have a clear spending limit
The same article also notes that it is important to have set a clear spending limit and to automate it if possible. This way, it will be impossible for you to go above your means, which is a problem that happens to many new credit card users when they receive their first card.
Oftentimes, limits are instated by the bank upon your application, so always be conscious of it to avoid any problems. Doing so can help you be more aware of how much you are spending and help you make less purchases.
3. Establish good credit
For those who want to build good credit, a credit card is one of the most effective ways to do so. A feature on credit scores published by AskMoney outlines how it can affect many financial aspects of your future life, like applying for utilities, renting properties, and even signing up for insurance.
Good credit scores are highly valued in many different countries, so it is important to try and aim for a good score if you’re looking to move abroad. You can do this by paying your dues on time and always staying on top of your bills. If you ever want to take a loan, having a good score is necessary to get approved for lower rates, helping you save more in the long run.
4. Spend to earn perks and reward
For those who like to travel or buy retail items, using a card can have many benefits. CNBC writes that many institutions have a points system that allows you to accumulate rewards by making purchases.
These points can then be converted to practical uses, like airline miles, discounts at certain shops, and even cash back percentages. The more you spend using your card, the more perks you will be able to receive from your provider. Just be sure that you are only spending money you know you can pay back.
One benefit of using a credit card that not many people know about are the terms regarding price adjustments. Certain companies have clauses in their contracts stating if you bought something for full price but soon after see it at a discount, you can file for reimbursement for the amount you could have saved on.
A list on Forbes regarding different carriers that permit this includes Capital One and UBS. Be sure to read the terms and agreements thoroughly to see if you are eligible for this perk and what requirements your bank needs. This will help you save in times you could have spent less.
Before applying for a credit card, always consider the pros and cons of doing so. Decide if it is right for you and understand the risks. Pay your balance in full and on time to prevent any overdue penalties that may occur.
If you use them properly, credit cards can help you save money in many different ways. Make sure to always use perks and benefits to your advantage so you can make the most out of them.