How do credit cards work in South Africa? (An inside guide)

We swipe them all the time, but do we really understand how credit cards work?

There are a couple of basics that make all the difference.

From fees to the application process—here’s everything you need to know.

 

How does a credit card work in South Africa?

A credit card in South Africa provides access to a pre-approved line of credit from a bank. This allows the cardholder to make purchases and repay later. Generally within a set billing cycle.

Essentially, credit cards allow people to actively borrow money with a set threshold. If the full amount is not repaid by the due date, the bank charges interest on the remaining balance. 

The cool thing about credit cards is they can also help build a strong credit history. That is, if the cardholder uses their card responsibly.

⭐ Related content:

• Revolving loans and credit—what are these credit facilities?
• What is an overdraft? How does it work?

 

 

How do credit card payments work?

A credit card allows the cardholder to borrow money from the lender to make purchases. When the bank issues a credit card it stipulates limits, minimum repayments, and interest. Which the borrower repays in instalments when they use the credit card.

When a credit card is used for a purchase, the lender pays the store [or merchant] directly. Then, the cardholder gets a bill from the bank [the card issuer] detailing the transactions, outstanding balance, interest, fees, and the due date for their repayment.

When the cardholder [or borrower] makes payments, they pay either the minimum amount required or a percentage of the outstanding balance. If they pay off the full balance each month, there’s no interest charges.

But, if only part of the balance is paid, interest is applied to the remaining amount.

Many South African banks offer up to 55 days of interest-free credit—as long as the cardholder pays off the balance from the previous month in full.

This is important: It means paying on time saves money by reducing interest.

Basically, the quicker you pay, the less you pay in interest.

Handy, right?

Let’s go even further…

 

Credit card minimum payment

The minimum payment is the smallest amount required each month to keep a credit card account in good standing. In South Africa, this is usually between 3% and 5% of the outstanding balance, or a fixed minimum, whichever is higher. Paying the minimum helps avoid late fees, but interest continues to accumulate, potentially increasing overall debt over time.

It’s like treading water—there’s no real progress toward paying off the debt. The better option is to repay the amount as fast as possible.

In fact, that’s one of the ways we recommend people get out of debt faster.

 

Interest on credit card

Credit card interest starts accruing when the full balance isn’t paid by the due date. In South Africa, interest rates are linked to the prime lending rate, typically ranging from 10% to over 20%. Interest is only applied to the balance carried over to the next month, so paying the full balance eliminates any interest charges.

The lesson here?

Pay off what you can, when you can, to keep those interest charges at bay.

Here’s an example.

 

Example of how credit card payments work

Let’s say Ashley has a credit card with an outstanding balance of R5,000 and a minimum payment of R150.

If she only pays the R150, the remaining R4,850 will begin accumulating interest. Assuming her credit card has an annual interest rate of 18%, the monthly interest rate would be 1.5% (18% ÷ 12 months).

In this case, interest for the next month would be approximately R72.75 (R4,850 × 1.5%).

Notice that the interest is almost half of her payment? This means she pays R150 to make a R77,25 dent in her outstanding debt. Sometimes, the entire repayment goes to interest.

Over time, if Ashley continues to pay only the minimum amount, the interest will keep adding up, making it more difficult for her to pay off the total balance.

 

 

How do I get a credit card?

Getting a credit card in South Africa is pretty straightforward. Start by choosing a card from a bank or financial institution. After that, submit an application—either online or in person. Then, the bank does a credit history and affordability review to decide whether to approve or deny the application.

Steps to get a credit card:

1. Research different credit card options from various banks.
2. Select a card that matches specific needs, considering interest rates and rewards.
3. Submit an application online or at the bank with the required documents (ID, proof of income).
4. Wait for the bank to assess the application.
5. If approved, receive the card by mail or collect it at the bank.

 

Easy enough, right?

⭐ Related content: Credit scores and credit cards — how to get your card

 

How to qualify for a credit card in South Africa

To qualify for a credit card, certain criteria must be met, such as having a stable income and a positive credit record. Banks also evaluate existing debt to ensure the applicant can manage additional credit responsibly.

Qualifying criteria include:

1. Be at least 18 years old.
2. Have a valid South African ID or passport.
3. Provide proof of income (typically a minimum monthly income of around R3,500, depending on the bank).
4. Maintain a good credit score and a positive credit history.
5. Meet the bank’s affordability requirements, which include assessing current debt and expenses.

 

Basically, if you can show you’re good with money, the bank is more likely to give you a credit card!

 

How to use a credit card

A credit card can be used in several ways. The cardholder can tap or swipe the card, add the card to a digital wallet on their phone, or use the card details to pay online.

Here are the three ways to use a credit card:

1. Swipe, insert, or tap: Use the card by swiping, inserting it into a chip reader, or tapping it for contactless payments at the checkout.
2. Add to a digital wallet: Link the card to a digital wallet for convenient contactless payments via a smartphone or wearable device.
3. Enter details online: When shopping online, enter the card information (number, expiry date, and CVV) to complete purchases.

 

Convenient, right?

(Honestly, there’s no going back once you connect your card to a digital wallet. It is so easy to pay with your phone.)

Let’s go over what we learnt today.

 

In summary

Credit cards are useful. But, it can be expensive if payments aren’t managed.

Always remember to keep interest charges in mind.

If you’re struggling with debt, we could help reduce how much it costs every month and free up some of your income for other critical expenses. Try our online assessment at My Debt Hero to see if you qualify.