Credit Card Transaction Charges

Understanding credit card transaction charges will lower your bills and enable you to take advantage of free transactions and interest-free credit.

There are a number of fees and charges associated with using a credit card, and being aware of these will help you to minimise them as much as possible. The good news for consumers is that competition within the financial industry has provided more advantages to cardholders in recent years, including free transactions and reduced banking costs.

Nonetheless, there will always be credit card charges attached to using plastic. These fees are dependent upon the type of credit card you have, its features and benefits, and the particular rates charged by your bank. In this article we’ve unpacked credit card transaction charges and taken a look at free credit card transactions.

Cost of credit card transactions

• Free credit card transactions:
Credit card holders do not pay to swipe their cards – in other words, they pay no point of sale (POS) fees. This expense is carried by the merchant. It’s one of the major differences between using credit cards and using other types of non-cash payment methods, such as debit and cheque cards, for which swiping fees are usually incurred.
• Pay As You Use transaction costs
There are a number of “pay as you use” costs associated with credit card usage. These credit card transaction costs differ from bank to bank, and the specific figures are available on the banks’ websites, or in informational pamphlets available from the branch.

Cardholders will pay credit card transaction fees when, among other things, they:

• Withdraw money at an ATM or branch
• Request balance enquiries at an ATM
• Make branch deposits of cash or cheques into the account
• Incur penalties for payment transgressions, such as dishonoured payments

Credit card holders will also be charged interest on their purchases, unless they enjoy an interest-free credit period, and settle their outstanding balances in full before the interest-free period is over. The interest-free period offered by banks is usually around 55 days. Annual card fees and once-off initiation fees are also applicable to some credit cards.

How can I avoid paying credit card transaction charges?
Credit cards are highly efficient money management tools, and by using them correctly, you can reap significant benefits without incurring excessive transaction fees. Try to use your credit card only for swiping purposes. If you need to withdraw cash from the bank, use a different account. Many cheque accounts, for example, offer a number of free withdrawals per month. Take advantage of these types of benefits.

Moreover, always try to settle your credit card debt within the interest-free period. This way, you’ll enjoy a continuous interest-free credit loop. Being a responsible credit user will ensure that you don’t incur any penalties for dishonoured payments and other such transgressions, which will also help you to avoid unnecessary fees.

Apply for a credit card today
Applying for a credit card is quick and confidential, thanks to online credit card application facilities. Simply follow the steps for submitting your application, and you’ll soon know whether you qualify for a leading South African credit card.