Rising interest rates are forcing South African consumers to revisit their debt obligations, with the more expensive debts, and credit cards in particular, bearing the brunt of the scrutiny. Many existing credit card holders either misunderstand, or are oblivious to the interest rates, the fees and the supplementary charges associated with their cards. So, for some, what they uncover is startling.

This lack of awareness is a combination of the lack of disclosure that characterised the pre-June 2007 financial services sector and a lack of consumer knowledge.

When the new NCA came into effect last year, credit card issuers were compelled to shed some light on the credit card dark – albeit not to the same extent as their US counterparts. But, it is an improvement nevertheless. At least now, when you apply for a credit card, the issuers have to provide you with a quotation that includes the following minimum details: the credit limit on the card, the ongoing credit costs, the details of the service and initiation fees, the minimum monthly payments and the interest rates that apply.

At the best of times, credit card interest is high. Right now, not being the best of times, the rates are even more daunting. This creates a dilemma: How do you continue your enjoyment of the benefits of a credit card without having to pay any interest? Well, there are ways and means – ones that the banks are not necessarily keen on because they lose revenue in the process. The point is that you can avoid paying interest if you play the 0% interest credit card game smartly.

A credit card is a revolving line of credit that you access every time you withdraw money from it or use it to make a purchase. At the end of each month, your credit card issuer supplies you with a statement, which contains details of the expenses you incurred, the outstanding balance on the facility, the available balance on the facility, what the minimum payment is and when this payment falls due.

If you pay the minimum amount, the remaining outstanding balance will bear interest. If, on the other hand, you settle the full outstanding balance on your credit card, no interest will be levied. In short, to avoid interest, pay your full outstanding balance when it falls due.

Most of the credit cards offered by South African issuers come with a grace period. The grace period refers to a predetermined time frame which runs from the moment you use your card for a purchase or for a cash withdrawal, until the moment when interest is levied on that purchase or withdrawal. In effect, the grace period translates into a time-limited, interest free loan.

The grace period can be anything from 0 to 57 days, depending on the credit card product you selected. To play the 0% interest credit card game in this context, you will need to track your credit card expenses carefully and make sure that you settle the amounts spent before the applicable grace period expires.

In many countries, three or six month 0% balance transfer offers are commonly employed by the different credit card issuers to attract their competitors’ credit card holders. Here, 0% balance transfer offers are like hens’ teeth – there are none. The best you are likely to do, is 9%.

But, perhaps in view of the fact that South African consumers are becoming increasingly willing to credit card hop in pursuit of a better deal, and that the decline in credit card applications is intensifying competition for market share, the local issuers may revert to these 0% balance transfer tactics too – a tactic that bodes more-than-just-well for the South African credit card holder.