For some it is a pleasure, and for others out-and-out a pain. How you experience the ubiquitous sliver of plastic we call a credit card, goes beyond praising or hating – whichever may be the case - its finer workings. It is your spending- and payment behaviour patterns that could well be making the difference.

Using a credit card optimally, means that you need to understand the good, the bad and the ugly of your spending- and your repayment behaviour. It is this understanding that will enable you to exercise the most appropriate credit card choice. If you get it right, correcting your credit card management ‘weaknesses’, becomes a whole lot easier.

Very little – if any – guidance is offered to South African consumers to help them choose those credit cards most appropriate to their credit card behaviour. In fact, when you look at how the different credit card products are presented by the various issuers, a distinct impression is created that your income bracket is a main determinant in your credit card choice. This is far from accurate.

In the absence of any local guidance, we should perhaps look at what the specialist Australian-based credit product research company, Cannex, have to say about credit card behaviour patterns.

Cannex classify credit card behaviour in four different categories:

Habitual spenders tend to have a hard time paying off their credit cards. They are inclined to spend every month whatever it was that they paid on their credit cards the previous month, so the debt keeps revolving.

In general, Impulse Spenders tend to reserve their credit cards for emergencies. But, come heydays and holidays, they binge, embarking on impulsive spending sprees that leave them paying off their cards for a couple of months thereafter.

Everyday spenders charge their day-to-day purchases (such as petrol, groceries and stationery) to their credit cards. They tend to avoid carrying balances though, so you will find that those consumers, who fall in the Everyday Spender category, more often than not settle their outstanding balances as and when these fall due.

Big Spenders are big earners. They spend a lot; using their credit cards all the time for just about everything. The Big Spender is in the habit of (unfailingly) settling the full outstanding balance on the credit card each and every month.

It is very much a case of different strokes for different folks. Cannex goes on to explain the type of credit card each different category of spender would be better suited to:

• Habitual Spenders should ideally select a credit card that offers a low interest rate and either low or no annual fees. Unless a reward scheme or a loyalty programme is offered free of charge, it should not form part of your decision making process. In the South African context, the Virgin credit card could be a match. It is subject to an interest rate of 19.5%, charges no annual fees and has a free rewards programme thrown in.
• Impulse Spenders, like Habitual Spenders, are also ideal candidates for a low interest, low or no annual fee credit cards that offer subscription-free loyalty programmes. Once again the 19.5%, no annual fee Virgin credit card, is a likely candidate.
• Everyday Spenders’ tendency- to settle their outstanding balances in full mean that credit card interest rates are a secondary consideration. Instead, card costs are the challenge here because of the many frequent small transactions made with their cards. It is for this reason that rewards programmes – unless free – should be avoided. A good match could be the Absa Silver Rewards credit card.
• Big Spender’s can basically ignore interest rates and should focus on those benefits and perks that would be the most meaningful to their personal circumstances. If you travel often, these perks could be in the form of free travel insurance, a travel rewards programme and hotel discounts, amongst others. Diners and American Express are likely to meet these requirements.

Basically good financial habits should always prevail – even if you have found your match. These include:

• Knowing thy credit card – warts and all.
• Drawing up a monthly budget, and sticking to it. Try to avoid those situations where you could be tempted to indulge in binging.
• Controlling your expenses by exercising some personal self discipline. An effective impulse spending control is a self-imposed cool down period.
• Paying at least the minimum amount due – judiciously - each and every month

Although life automatically gets better if you are using the credit card best suited to you, it is not a silver bullet. If is how you are using the credit card best suited to you, that is.