Choosing your card’s budget facility (2024)

Whenever you swipe your credit card in-store, you’ll most likely be asked whether you want to make the purchase ‘budget or straight’. The bank provides these payment facilities to give you options for how you plan to pay and how you’d prefer to structure the interest.

It’s crucial to understand the difference between the budgeting and straight facilities of your credit card so you can make informed financial decisions that enable you to manage your finances better and avoid unnecessary debt.

Here’s a closer look at using your credit card’s budgeting facility:

The difference between budget and straight facilities

When to use the budget facility

When you select the budget facility, it spreads the cost of the purchase over a longer time and acts like a term loan, such as a personal loan. The benefit is that you’ll know exactly how much it will cost you and by when it needs to be paid off.

You can only choose the budget facility on purchases of R200 or more and then decide on a repayment period of up to 60 months. Remember that you’ll still be charged interest over that time and, therefore, you should weigh up the initial saving with the total cost of purchase.

If you’re paying for a large and expensive item, such as an appliance, furniture or jewellery, and plan to pay it off over a few months, buying it ‘on budget’ could make it easier to manage your monthly expenses, but for smaller purchases that can be repaid faster, it would be better to choose the straight facility and pay it off within the 55-day period so that you don’t incur any additional costs.

Note: you can’t use your budget facility to buy foreign currency, traveller’s cheques or progressive payments, such as your home loan.

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_{Disclaimer: This article is solely intended for information. It does not constitute financial, tax or investment advice or recommendation. Please speak to a financial advisor or registered financial professional before making any financial decision(s).}

_{Standard Bank, its subsidiaries or holding company, or any subsidiary of the holding company and all of its subsidiaries make no warranties or representations (implied or otherwise) as to the accuracy, completeness or fitness for purpose of the information provided in this article or that it is free from errors or omissions.}