Credit cards and your credit rights
01/08/2018 As it is with most things, too much credit will definitely make you sick! However, if properly managed, credit can help you maintain a healthy financial life. Credit cards are a great tool for cash flow management and often provide you with a financial cushion to help with early debit order collections and other cash-demanding situations that you may not always see coming.
Your credit rights are protected by the National Credit Act (NCA). The office of the Credit Ombuds deals with complaints relating to the violation of those rights. As a consumer, it will be useful to familiarise yourself with these so you know what to do if you find yourself in an unsavoury situation with your credit provider.
Basic credit rights
Your credit rights apply to all other forms of credit, not only credit cards.
- Credit application and discrimination: You have the right to apply for credit. However, this doesn’t mean that you have the right to be granted credit. In determining whether or not you qualify for a credit card, banks must use a fair criteria that doesn’t discriminate against you.
- Reasons for rejection: If your credit card application was rejected, you have the right to know why. Upon your request, the bank is obligated to give you written reasons for rejecting your application. This rule also applies to the refusal to increase your credit card limit or renew an expiring credit card and the offering of a lower credit limit.
- Access to credit records: You have the right to access and challenge your credit record. If you challenge the accuracy of the listed information in your report, the bank is obligated to produce evidence in support of the listing. Failure of which will result in the credit bureau removing the information.
If you feel your rights have been violated, you can lodge a formal complaint against your bank via Resolver for free.
Managing credit card interest
Credit card interest can be quite high, especially if you pay less than the minimum amount you should be paying as you are charged interest on the outstanding balance until you have paid it off in full.
55 day interest free period: Most credit cards have a 55 day interest free period. In this period, you pay no interest provided you pay the full outstanding balance by the due date.
Note that if you don’t pay the full outstanding amount you will be charged interest on the money outstanding and any new purchases that you make, from the date of purchase.
The zero interest provision only applies to purchases that you make with or on your credit cards. Other transactions will incur interest normally.
It is important to understand exactly how this works to avoid paying interest unexpectedly. If you are not sure when to make your final payment in order to qualify for zero interest, contact your bank and ask for clarity on the issue.
On the occasion that you were incorrectly charged even though you settled the balance during the interest free period, alert your bank to this mistake. They should be able to resolve this after a look at your payments.
Part of making the most out of your credit card is protecting yourself against theft. Credit card fraud is becoming increasingly high, with criminals using strategies like phishing to access sensitive information and use your card without your knowledge. Always remember, never give out your sensitive information or use suspicious links to access your bank’s website or your banking profile.