South Africa: Why credit cards can be very rewarding

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By: Wise Marketer Staff |

Posted on January 25, 2007

In South Africa, the Discovery and SAA credit cards have been ranked top in a Razor's Edge Business Intelligence survey aimed at finding out which are the country's most valuable credit cards for consumers to hold.

The SAA Voyager Premium card is the country's most valuable standalone credit card and the Platinum DiscoveryCard is the most valuable card overall, according to the Value in Credit Cards 2006 survey report. The annual survey is undertaken by Johannesburg-based loyalty marketing consultancy and research firm, Razor's Edge.

What makes them winners?
The SAA Voyager Premium card is part of a suite of three credit cards launched by the airline in August 2006. SAA launched the card in the middle of a number of national credit card launches between June and November 2006.

The Platinum DiscoveryCard is a more established product, having been on the market for two years. The card is linked to multiple products in the Discovery product range, the most notable being its Vitality wellness programme.

New players
"It has been a fascinating year in the credit card industry," said Bruce Conradie, managing director for Razor's Edge. "In only five months seven cards were launched. And not just new cards, but new brands, came onto the market. The local market now has six brands that were either not here six months ago, or were not associated with credit cards."

The six new brands in South Africa's credit card space are Virgin Mobile, SAA,, Clicks, Vodacom, and MTN. And, according to Conradie, there are other new entrants in the wings. The supermarket chain Pick 'n Pay's Go Banking division has also launched a card.

Other winners
Four other cards were awarded accolades in the research report. Evaluations were done in six card spend ranges, for both standalone and linked cards.

The Woolworths Silver card was found to be the most valuable standalone card for consumers spending up to R2,000 a month on their cards. For those spending R2,001 to R4,000, the most valuable card is the FNB Platinum card. Over R4,000 a month, the SAA Voyager Premium card is the most valuable.

For the most valuable card overall, for a card spend of less than R1,000 a month, the accolade was given jointly to cards linked to the Bestmed and Telemed medical schemes. Above R1,000 a month, the best card overall is the Platinum DiscoveryCard.

Good value for consumers
The survey found that consumers can get good value from their credit cards. Taking the two winning cards as an example, the survey shows that high-spending DiscoveryCard holders can earn rebates of up to R15,000 a year (made up of rebates from partner stores, travel package providers, and an FNB home loan). The same cardholder could earn an additional R3,000 to R4,000 worth of Discovery miles. Moreover, these values exclude the value of the interest-free credit period (which is offered by all credit cards nationally).

In the case of the SAA Voyager cards, the value comes mainly from Voyager miles earned on all card spend, and on a free companion ticket. The latter is available once a year, provided cardholders reach modest card spending thresholds.

Other value-added benefits offered by credit cards include free airport lounge access (Diners Card), donations to worthy causes (Nedbank donations to art, environment, or sport), and concierge services (Diners Card).

More redemption options
Consumers also have more options than ever before for redeeming their points or miles. Old Mutual Bank, for example, allows cardholders to the exchange their points (called Greenbacks) for airline flights, accommodation, shopping vouchers, and donations to charities. They may even use their Greenbacks to pay their bank charges, or invest them in unit trusts.

Value in Credit Cards 2006 is the second iteration of an annual survey of South African credit cards. The report profiles 99 credit cards and 20 card issuers (both banks and co-branded). The report is available for purchase directly from Razor's Edge Business Intelligence.

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