For the last 14 years I have been the happy owner of a Virgin Money credit card. The card has zero annual fees which made it a perfect credit card to hold for emergencies rather than using for day-to-day spending. In my case I also used it for booking travel such as flights and accommodation.
Sadly, Virgin Money is closing in South Africa and I was notified that I could either settle up and close the card or transfer to an Absa credit card by 8 April. Unfortunately, there is no zero-fee standalone credit card in the market, so I went in search of the most cost-effective credit card option.
My research found that Capitec and Absa Flexi Core came in at the lowest monthly fee of R40 and R44 respectively. Other banks’ credit cards started at around R50 a month.
As an interesting note, when I first started my investigation, Absa’s marketing of their Flexi Core fee was misleading – the website showed a fee of R14 per month, with the fine print adding on R30 as a “credit facility fee”. I note that they have since updated it to show the full cost.
According to the Capitec website their card requires a compulsory credit insurance premium, which is unnecessary in my case as I settle my card in full each month. On further enquiry I was told that this is only a requirement for individuals with poor credit records.
Absa allows for a fully online application via their website. There is even an option to provide permission for them to access your last three months’ bank statements directly from your bank. However, in practice I discovered that it was quicker to simply email the statements to them.
Capitec, surprising given its innovative positioning, only provides for in-branch applications. So, you must go to a Capitec branch with your three months of bank statements, ID documents and proof of address. Capitec has assured me that in the next few months their credit card application will be fully online, however that is a bit late for me as my Virgin Card expires in April.
As I have an aversion to entering any bank branch, I decided to go with the Absa online process which has the added advantage of the balance transfer.
Now for the catch. The Absa online application generated a credit card application based on my income and affordability and therefore would not provide me with the option for the cost-effective entry-level card, namely the Flexi Core. I had to contact their card division to resolve the issue.
In the end I had to accept the card that was offered and once approved, I could then downgrade to the Flexi Core option. As a result two cards were delivered to my house and I cut up the card I did not need.
I have been assured that I will not be charged duplicate fees. Since I’m a financial journalist they’re probably going to make sure this doesn’t happen, but the experience may be different for another applicant and will require some vigilance.
When I asked Absa about this, their customer service agent emailed the following: “If a client did an application online by themselves, once the application is finalised then they can request for a downgrade to Flexi Core card. So even when we contact a Virgin Money client, or if they called in and the application is approved for a different product, they can still request for a downgrade once the application is finalised.”
Another admin hassle was the numerous calls to ‘verify’ me. I had a stand-off at one point because the caller wanted me to verify my personal information before telling me what the call was about. I insisted on calling the customer service division to verify that the call had in fact come from them. They then had to call me again. This is something the banks needs to figure out – security is important for both the client and the bank!
The courier service was excellent, but attempting to create a PIN has not been so smooth. In theory you can call the General Enquiries from the mobile number you used in your application, they then send you a push notification for you to approve and from there you can set your PIN, but I have not managed to receive the push notification due to “technical issues”. It seems at this stage if I want to set my PIN, I may have to walk into a branch after all.
Note that if I was already an Absa customer, I could do this through their banking app. But in order to register for their banking app you need a PIN, so it becomes a catch-22.
On the Capitec card, I am trying to convince my husband, who is also a Virgin Money card-holder, to take the time to go into a branch and test out the experience – but when does anyone have the time to do that?
The main advantage of Capitec is that they do not charge a foreign currency transaction fee which helps for any overseas purchases or travel.
The lesson from this is that you do not have to take an expensive card option. You get the same credit limit and interest rate you would be given on any card as it is based on your profile and affordability.