* ‘Don’t try to compete with friends or neighbours,’ says Ina Wilken of the South African National Consumers Union. ‘Credit in any form is costly, because you pay interest.’
* Know your spending style – if you’re not disciplined, don’t have credit cards and don’t get an overdraft facility unless it’s imperative (for example for a car or house).
* Be honest about all your debt and financial obligations when you apply for credit.
* Shop around for the best credit deal. ‘Get quotes – it’s compulsory under the new act that providers give you one before you get credit – and compare the different cost items,’ says the National Credit Regulator’s Marlene Heymans.
* Compare interest rates, initiation fee and monthly service fees, she says, ‘and, very importantly, the cost of credit insurance if applicable. This can be expensive. Investigate products other than the one on offer by the credit provider.’
* Know that the amount of insurance may not exceed the full replacement value of a property or the outstanding amount on a vehicle agreement, says Wilken. ‘And where the credit provider arranges your insurance, they may not charge an additional amount above the actual cost of the insurance.’
* Read any agreement or contract carefully, and think it through thoroughly before you sign.
* Put down as big a deposit on car- and house-finance transactions as possible.
* Pay more than the minimum instalment required. ‘Some credit-card companies tested have shown that by only paying the minimum amount stipulated, it can take more than five years to pay off debt,’ says Heymans.
* Remember, plastic money is still money – don’t be tempted to overspend.
* Always read statements to keep track of what you owe.
* Make your repayments religiously.