Credit card or overdraft?

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genetic

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Is there any benefit in getting a credit card over applying for an overdraft facility instead?

I know that a credit card allows you to do free transactions and (Standard Bank) offers 55 days interest free repayments.

Is the interest rate the same?

Also what's the benefits of a gold credit card over a normal credit card?
 
This highly depends on the bank in Question.

Imo, neither is good option. Cash is king :)

However, generally more benefits and better rates are offered on credit cards. So if you must, credit card would be the lesser of two evils.
 
You do get up to 55 days interest-free on a CC, but thereafter the interest rate is 24%, more than double that of an overdraft - decide what you need !
 
Also have a look at a revolving loan. They can offer upto 3X your gross income and you only use the money you need (it's like another cheque account like to your name) and also pay interest on the amount you use.

Repayments is over 40 months and is on the amount you qualified for. In other words, if you qualify for R 100 000, but only withdraw R 20 000, you will pay interest on the R 20 000, but satrt paying of R 2000 pm (R 100 000/ 40)
 
You can't always say a credit card is higher interest.

My FNB Overdraft is 15% while my FNB Credit Card is 13% ... and my Go Banking overdraft 11%
 
And never create multiple accounts. Like an Edgards and a Woolworths. Each one charges fees for you to have an account and be able to use it.
 
I veer from credit and overdrafts - you'll see your butt in the end with them and non stop calls from private numbers with a ladies voice going ' this call is being recorded for legal purposes'................
 
As a Merchant myself it always amuses me how people often don't know or forget that in order for someone to enjoy no charges or interest for 55 days we have to pay commission to the Bank at an average rate of about 2% per month, which is basically the equivalent of 24%.

In other words the Merchant pays for your "free" interest, which more than likely is built into the cost of the goods in any event.
There is nothing "free" in this world.

If I was forced to choose, I would prefer a reducing overdraft over 24 months, which is like revolving credit if you think about it.
At least at the end of your overdraft it you don't have that tempting Credit Card in hand, but a rather a nil or positive balance.
 
sorry for the thread necro but I need to make this decision soon. some background:

parked some money in my access bond a couple of years ago. month ago I find out standard bank has removed my access facility because I changed jobs and I don't qualify for the group rate anymore. they removed the facility with no communication in December last year, according to their t&c's they are covered but this now leaves me a bit fsucked. my money is now behind lock and key. in short they want to rerate my existing bond and up my interest rate. so I told them to FO. thereby keeping my current interest rate. if I apply for a new access bond facility or an advance on the bond I will be rerated.

but now I need access to cash. so I need to make a decision. it would be easier to just extend my CC limit but the interest would be more than an overdraft im guessing. the overdraft would then attract initiation costs as well. so what is your thoughts please?
 
Last edited:
kiepie said:
Also have a look at a revolving loan. They can offer upto 3X your gross income and you only use the money you need (it's like another cheque account like to your name) and also pay interest on the amount you use.

Repayments is over 40 months and is on the amount you qualified for. In other words, if you qualify for R 100 000, but only withdraw R 20 000, you will pay interest on the R 20 000, but satrt paying of R 2000 pm (R 100 000/ 40)
Click to expand...

See this part didn't make sense to me.

So what happens if you only ever use that R20k.

By the end of the loan you've paid R80k extra for no reason at all.
 
Chevron said:
See this part didn't make sense to me.

So what happens if you only ever use that R20k.

By the end of the loan you've paid R80k extra for no reason at all.
Click to expand...

You only pay the 20k back + interest. Pay back until balance is 100k again. About 12 months
 
I've had both for many years, and I'll tell you one thing ... go for the credit card.

I can never seem to pay off my overdraft, but I've paid off my credit cards and re-used them multiple times, while my overdraft is just happily sitting there and making my life miserable by converting my bank balance into a negative number.

The only benefit to an overdraft is lower 'repayment', if you want to look at it like that, because the only direct cost is the interest you owe that is added directly to the overdraft ... unlike a credit card, which has the interest PLUS a minimum repayment factored in. I'd say that my credit card repayments have always been at least three times higher than my overdraft payment, so that's maybe something to consider?

Go for a credit card if you want to feel guilty about your debt and have an enforced payment structure to clear it.
Go for an overdraft if you need access to credit and you don't think you're going to have money in the short-term to pay it back, so you'd rather just let it build up interest or cover at least that much (bear in mind you don't want to go into overdraft on your overdraft so never use more than you can afford lol).

In terms of interest rates, I think both of mine are very close to each other (within 2% difference), so that's not a factor, but I've probably ended up paying stacks more interest on my overdraft simply because that's all I pay ... while I rather divert my money to paying off the credit cards/other 'visible' debt.
 
akescpt said:
but now I need access to cash. so I need to make a decision. it would be easier to just extend my CC limit but the interest would be more than an overdraft im guessing. the overdraft would then attract initiation costs as well. so what is your thoughts please?
Click to expand...
Depends on the overdraft rate. They range all the way from prime -1 to well...heavy interest. So you'd need to weight the interest you'd get charged against the rerating factoring in that the rerating would apply to the full amount.
 
Reading this thread am actually genuinely surprised how many of you are terrified of credit cards as if you're irresponsible teenagers.

Having and using a credit card is an important part of building a solid credit history that allows for lower interest rates on vehicle finance and bonds. Cash is not always king if you don't have a casual R2m laying around for a decent house or R400k for a decent car. Then if you do deside to go the finance root, you get given a rubbish interest rate.

SO to answer the question. If you need overdraft, you are overspending and need to assess your month expenditure but if you want credit, the card it the better way to do but be responsible. It's really not that hard.
 
ChocolateBadger said:
Reading this thread am actually genuinely surprised how many of you are terrified of credit cards as if you're irresponsible teenagers.

Having and using a credit card is an important part of building a solid credit history that allows for lower interest rates on vehicle finance and bonds. Cash is not always king if you don't have a casual R2m laying around for a decent house or R400k for a decent car. Then if you do deside to go the finance root, you get given a rubbish interest rate.

SO to answer the question. If you need overdraft, you are overspending and need to assess your month expenditure but if you want credit, the card it the better way to do but be responsible. It's really not that hard.
Click to expand...

Well said
 
I don't need money for monthly expenses. Due to me losing my access bond I've lost my savings.i just need to cover 20k in the short term. Hence the question, overdrafts or credit card.
 
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