Building or rebuilding your credit score can seem like a daunting task, but having the right credit card can help. In South Africa, there are several credit cards designed specifically for individuals with low credit scores or those just starting to build their credit history. In this blog, we’ll outline and review five of the best options for South Africans looking to improve their credit.
1. FNB Easy Smart Option Credit Card
Interest Rate: Starting from 17.25% p.a.
Income Requirement: R3,500 minimum monthly income
Annual Fee: R324
Monthly Fee: No monthly fee
Review Overview:
- Credit Score Impact: The FNB Easy Smart Option is perfect for those who need a simple, affordable way to build their credit. The lack of monthly account fees makes it accessible for low-income earners, while responsible usage (paying balances on time) can gradually improve your credit score.
- Affordability: The R324 annual fee is manageable, and there are no ongoing monthly charges, which can be helpful for those with tight budgets.
- Benefits: This is a no-frills card, so the focus is on helping users build credit without overwhelming them with extra features. It’s ideal if you’re seeking a card solely for credit-building purposes.
Pros:
- No monthly fees.
- Simple and easy to manage.
- Available to those with a minimum income of R3,500.
Cons:
- Lacks rewards or cashback programs.
2. Capitec Global One Credit Card
Interest Rate: 17.50% p.a.
Income Requirement: R3,000 minimum monthly income
Monthly Fee: R45
Review Overview:
- Credit Score Impact: Capitec’s Global One Credit Card is another solid option for those with low credit scores. Its moderate interest rate and low-income requirement make it easier to qualify for while promoting responsible borrowing.
- Affordability: With a low monthly fee of R45, this card remains affordable, even for individuals just starting their financial journey. The minimum income requirement of R3,000 also makes it highly accessible.
- Benefits: Capitec offers additional features through their Global One banking services, which integrates credit cards, savings, and transactional accounts into one solution. This comprehensive financial service adds value beyond just credit-building.
Pros:
- Low-income requirement.
- Moderate interest rate.
- Integrated with Capitec’s Global One product offering for ease of use.
Cons:
- No rewards or cashback features.
3. Absa Flexi Core Credit Card
Interest Rate: 17.75% p.a.
Income Requirement: R2,000 minimum monthly income
Monthly Fee: R32
Review Overview:
- Credit Score Impact: Absa’s Flexi Core Credit Card is ideal for individuals with very low income who are looking to start building their credit. The low-income requirement and affordable monthly fees make it an accessible option for young professionals or first-time credit card users.
- Affordability: This card stands out due to its extremely low income requirement and the lowest monthly fee on this list, making it highly budget-friendly for people on limited incomes.
- Benefits: This is a basic card focused primarily on credit building. While it doesn’t offer rewards, the flexibility and affordability make it a good starting point for credit-conscious consumers.
Pros:
- Extremely low income requirement.
- Affordable monthly fees.
- Easy to qualify for.
Cons:
- Lacks additional perks like rewards or cashbacks.
- Limited in features beyond credit building.
4. African Bank Gold Credit Card
Interest Rate: 15.00% p.a.
Income Requirement: R2,000 minimum monthly income
Monthly Fee: R50
Review Overview:
- Credit Score Impact: African Bank’s Gold Credit Card offers one of the lowest interest rates on the market, making it a great option for people with low credit scores. Responsible use of this card can help users establish a positive credit history and manage their debts more easily.
- Affordability: The monthly fee of R50 is higher than some other low-income credit cards, but the low interest rate compensates for this, especially if you carry a balance.
- Benefits: Flexible credit limits allow users to tailor their spending to their financial needs. The card also provides access to basic services such as transactional capabilities and account management tools through African Bank.
Pros:
- Low interest rate of 15%.
- Flexible credit limits.
- Available to low-income earners.
Cons:
- Higher monthly fee compared to other entry-level cards.
- Basic features with no rewards.
5. Nedbank Gold Credit Card
Interest Rate: 20.00% p.a.
Income Requirement: R5,000 minimum monthly income
Monthly Fee: R50
Review Overview:
- Credit Score Impact: The Nedbank Gold Credit Card is a more feature-rich card compared to others on this list. Although it has a higher income requirement, it’s ideal for individuals with low to mid-level credit scores who also want some extra perks.
- Affordability: The R50 monthly fee is reasonable for a card that offers a variety of features. However, the high-interest rate makes it less suitable for those planning to carry a balance, and the minimum income requirement of R5,000 is higher than most entry-level cards.
- Benefits: One standout feature of this card is access to the Greenbacks Rewards program, which allows users to earn points on their purchases. These points can be redeemed for a variety of items or used for travel. It’s a good option if you want to build credit while earning rewards.
Pros:
- Greenbacks Rewards program.
- Available travel perks and benefits.
- Ideal for individuals with some credit history looking to improve further.
Cons:
- Higher minimum income requirement.
- High-interest rate of 20%.
What to Look for in a Credit Card When You Have a Low Credit Score
When selecting a credit card designed for low credit scores, there are a few key factors to keep in mind:
- Interest Rates: Look for the lowest possible interest rate, as high-interest cards can make it difficult to manage debt if you carry a balance. Cards like the African Bank Gold Credit Card offer a competitive 15% rate, while the Nedbank Gold Credit Card has a higher rate of 20%, making it less ideal for balance-carrying.
- Fees: Annual and monthly fees can quickly add up. For instance, the FNB Easy Smart Option Credit Card has no monthly fees but an annual fee of R324, while the Absa Flexi Core Credit Card charges just R32 monthly, making it one of the most affordable options.
- Income Requirements: Make sure the card you choose fits within your income bracket. Some cards, like Capitec Global One and Absa Flexi Core, have low minimum income requirements (R3,000 and R2,000, respectively), making them accessible for a wide range of applicants.
- Credit Limit: A flexible credit limit can be beneficial as it grows with your credit score. African Bank Gold offers flexible credit limits, which is helpful for managing your spending as you build trust with the bank.
How to Use a Credit Card Responsibly to Improve Your Credit Score
Using your credit card wisely can significantly boost your credit score. Here’s how:
- Pay on Time: Always make payments before or on the due date to avoid late fees and negative marks on your credit report. This shows lenders that you are responsible.
- Keep Credit Utilization Low: Aim to use less than 30% of your available credit. If your card has a R10,000 limit, try to keep your balance below R3,000.
- Avoid Carrying a Balance: Where possible, pay your full balance each month. This saves you from paying interest and keeps your debt manageable.
- Monitor Your Credit: Some cards, like the Absa Flexi Core Credit Card, allow you to track your credit score, which can help you stay aware of your progress.
How Credit Cards Can Help Build or Rebuild Credit
Credit cards are an excellent tool for improving your credit score when used responsibly:
- Payment History: On-time payments account for about 35% of your credit score, so consistently paying your credit card bill is one of the best ways to raise your score.
- Credit Utilization: Your credit utilization ratio (the percentage of your credit limit you are using) impacts 30% of your score. Keeping this ratio low (under 30%) signals to creditors that you are managing your debt well.
- Building Credit History: The length of your credit history matters, so starting with a low-credit-score card now can benefit your score in the long run. Cards like the FNB Easy Smart Option are perfect for laying this foundation.
Things to Avoid with Low Credit Score Credit Cards
Certain habits can harm your credit rather than help:
- Missing Payments: Late payments can stay on your credit report for years, negatively impacting your score. Automating payments or setting reminders can help avoid this.
- Maxing Out Your Card: High credit utilization hurts your score. Avoid using your card up to its limit unless you can pay it off in full before the due date.
- Applying for Too Many Cards: Each credit application results in a hard inquiry, which can lower your score. Choose one card and focus on managing it well before applying for another.
- Paying Only the Minimum: While paying the minimum keeps your account in good standing, it also allows interest to accumulate, making it harder to pay off the debt over time.
Comparing Fees and Interest Rates
Here’s a quick comparison of fees and interest rates to help you decide which card is right for you:
| Credit Card | Interest Rate | Monthly/Annual Fee | Income Requirement |
|---|---|---|---|
| FNB Easy Smart Option | 17.25% | R324/year | R3,500 |
| Capitec Global One | 17.50% | R45/month | R3,000 |
| Absa Flexi Core | 17.75% | R32/month | R2,000 |
| African Bank Gold | 15.00% | R50/month | R2,000 |
| Nedbank Gold | 20.00% | R50/month | R5,000 |
While the African Bank Gold Credit Card offers the lowest interest rate, the Absa Flexi Core Credit Card stands out for its low monthly fee and income requirement. Meanwhile, the Nedbank Gold Credit Card provides added perks but comes with a higher interest rate and income requirement.
Who Should Apply for These Cards?
Each card on this list caters to different financial needs:
- FNB Easy Smart Option: Best for those seeking a no-frills card with a modest income who want to improve their credit without high monthly fees.
- Capitec Global One: Ideal for individuals who want an all-in-one financial solution, combining banking with credit services, at an affordable rate.
- Absa Flexi Core: Perfect for people with a very low income who want a starter credit card with minimal monthly fees.
- African Bank Gold: Best for those looking for a low-interest card with flexible credit limits, helping them manage their credit responsibly.
- Nedbank Gold: Suitable for those with a slightly higher income who also want to earn rewards while building credit, thanks to its Greenbacks rewards program.
Final Thoughts
Choosing the right credit card can be a powerful first step in improving your credit score. Whether you’re looking for low fees, flexible terms, or rewards, South African banks offer a variety of options tailored to those with low credit scores. Here’s a quick recap of the best options:
- Low fees: Absa Flexi Core Credit Card and Capitec Global One Credit Card.
- Best interest rate: African Bank Gold Credit Card.
- Rewards programs: Nedbank Gold Credit Card.
- Overall value: FNB Easy Smart Option Credit Card.
By choosing the right card and using it responsibly, you can rebuild your credit score and work toward a stronger financial future.
