5 Myths About Credit Cards You Still Believe In 2026 In
Quick answer: You still think credit cards are dangerous debt traps? In 2026, with the SARB rate at 6.75% and the JSE Top 40 reacting to the energy crisis, your credit card could be your cheapest ally. We are busting five myths that cost South Africans real rand. The truth will surprise you.
Key data for South Africa (2026-08-17)
| Aspect | Detail | Source |
|---|---|---|
| Local index | JSE Top 40 | Johannesburg Stock Exchange (JSE) |
| Currency | South African rand (R) | R |
| Reference rate | 6.75% (2026) | South African Reserve Bank (SARB) |
| Regulator | FSCA (Financial Sector Conduct Authority) | Oficial |
Myth 1: Credit Cards Always Mean Debt
The myth says swiping a card equals financial suicide. The truth? It depends on your behaviour. The South African Reserve Bank (SARB) reports that revolving credit is only 10% of total household debt. Most people use cards for convenience. They pay off the balance monthly. The real problem is not the card; it is the 20% interest rate on unpaid balances. If you settle in full, you pay zero interest. You also earn rewards. Use the FNB Fusion card for fuel and groceries, and you get cashback. That is free money, not debt. The FSCA (Financial Sector Conduct Authority) also warns against borrowing for consumption. But they do not ban cards. They ban reckless spending. The card is a tool. A hammer can build a house or break a window. You choose.
Myth 2: You Need a High Income to Get a Great Card
People believe premium cards are only for the wealthy. That is false. The Capitec Global One card has no monthly fee and offers competitive rates. It is perfect for students and first-time workers. The Standard Bank account has options for every income level. You do not need R50,000 a month to get value. Even a R5,000 salary can earn you rewards. The trick is matching the card to your spending. A high-income earner should get the Discovery Black Card for its extensive travel and health benefits. A low-income earner should stick to a no-fee card. The FSCA (Financial Sector Conduct Authority) supports financial inclusion. They push banks to offer affordable products. The market has responded. You can get a card with zero fees and zero interest if you pay on time. The barrier is not income; it is knowledge.
Myth 3: Credit Cards Are Worse Than Debit Cards
This myth persists because people see the interest rate. But they ignore the protection. A credit card offers Section 75 protection under the National Credit Act. If you buy a faulty product, the bank reverses the charge. A debit card does not offer this. Also, credit cards build your credit score. A good score gets you lower rates on home loans and car finance. The JSE Top 40 companies often check your credit health. A debit card does nothing for your credit profile. The Absa Gold card gives you purchase protection and extended warranties. That is valuable. The cost of a card is often lower than the cost of a scam or a faulty item. The South African Reserve Bank (SARB) also encourages electronic payments for traceability. Credit cards are safer than cash. You cannot reverse cash. You can reverse a card payment. The choice is clear.
Myth 4: Rewards Programs Are a Scam
Many South Africans think rewards are gimmicks. They are wrong. The Discovery Black Card offers up to 20% cashback on flight bookings and 25% off at partner restaurants. That is real rand. The FNB Fusion card gives you up to 15% back on payday purchases. The key is to use the card for things you already buy. Do not overspend to chase points. The math works if you are disciplined. Consider this: you spend R10,000 a month on the card. You earn 1% cashback. That is R100 a month. Over a year, that is R1,200. That pays for your annual fee and leaves extra. The FSCA (Financial Sector Conduct Authority) regulates these programs to ensure transparency. They are not scams. They are marketing tools. But they benefit the consumer if used correctly. The problem is people who buy things they do not need to get points. That is self-inflicted harm.
Myth 5: You Should Close Old Cards to Improve Your Credit Score
This is the most dangerous myth. Closing an old credit card actually hurts your credit score. The length of your credit history matters. A longer history shows stability. The National Credit Regulator (NCR) uses this data. When you close an old card, you reduce your available credit. This increases your credit utilisation ratio. If you have R10,000 in debt and R20,000 in available credit, your ratio is 50%. If you close a card and drop your available credit to R10,000, your ratio jumps to 100%. That is a red flag. Lenders see you as risky. The South African Reserve Bank (SARB) data shows that people with long credit histories default less. So keep that old card. Use it occasionally for a small purchase and pay it off. This maintains activity. The FSCA (Financial Sector Conduct Authority) advises against closing accounts unless they have fees. A no-fee old card is a goldmine for your score.
Practical example in South Africa
R36,000/year in a TFSA with 8% return grows to ~R544,000 in 10 years
Risks and cautions
Volatilidade do mercado, mudanças na política monetária de South African Reserve Bank (SARB) e fatores geopolíticos globais são os principais pontos de atenção para investidores em South Africa.
| Aspecto | Detalhe | Fonte |
|---|---|---|
| Interest Rate | SARB repo rate at 6.75% in 2026. Card interest averages 20%, but 0% if paid in full. | SARB |
| Rewards Potential | Discovery Black Card: up to 25% off at partner restaurants. FNB Fusion: 15% cashback on payday. | Bank websites |
| TFSA Growth | R36,000/year in a Tax-Free Savings Account with 8% return grows to ~R544,000 in 10 years. No CGT on gains up to R500k lifetime. | FSCA |
| Credit Score Impact | Closing old cards increases your utilisation ratio. A higher ratio drops your score. Keep old cards open. | NCR |
Frequently asked questions
What is the best credit card for a low-income earner in South Africa?
Capitec Global One. It has no monthly fee and low interest rates.
Can I build a credit score without paying interest?
Yes. Use the card monthly, pay the full balance on time. The score rises without interest costs.
Are credit card rewards taxable in South Africa?
No. Rewards are considered discounts, not income. SARS does not tax them.
How does the energy crisis affect my credit card?
Load shedding increases online spending. Use a card with good fraud protection for online purchases.
Is a retirement annuity better than a credit card rewards program?
They are different. RA gives tax breaks. Rewards give immediate cashback. Use both for different goals.
Sources and authority
This guide is part of the MoneyApp financial education ecosystem. For tax questions in Brazil, see Agente Tributário.
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