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Virgin Money is currently giving its cardholders an opportunity to register for a competition to win Woolworth vouchers.
If the cardholder spends R8 000 over December 2016 to January 2017, they are guaranteed to win a Woolworths voucher to the value of R50, R500, R1 000 or even R10 000.
This is, of course, a blatant attempt to get you to use your credit card and, for some people, trying to win a competition may end up in debt regret, but smart customers can have their cake and eat it too.
For a credit card provider like Virgin Money, their money is actually made through the transaction charges so the more transactions you make, the better for them – hence the competition. Absa is the banking sponsor behind the card and would issue the credit lines, so any interest paid by the cardholder would be earned by Absa.
Virgin Money is the only credit card provider in South Africa that has no annual card fees and the merchant pays the transaction fee, not the customer. So smart cardholders would first transfer the R8 000 into their credit card and then start spending to win.
The key is not to spend more than you have put into the card and, if you do, to settle it in full at the end of the month. If you enter the competition and end up paying interest, there really is no financial benefit.
The same principle can be applied to reward programmes linked to your credit card – you can earn those rewards without taking on credit. Credit cards are not necessarily instruments of evil; it is how we use them, and often our lack of discipline around them, that gets us into trouble. If you pre-fund your credit card and work those reward programmes, your credit card can actually be an asset.
