As of last month, the 6th of May, the maximum interest rates chargeable on credit cards and store cards was reduced to 21.48% in line with an amendment to the NCA ( National Credit Act).
Previously big retailers had been charging up to 25% interest on store cards. From late last year the same bit of legislation forced retailers to do more labour-intensive affordability checks on card applications to avoid being accused of reckless lending. Despite this, the National Credit Act allows retailers to impose a monthly service fee of up to R60.
Major clothing retailers were not doing this, but now they are, and Edcon (Edgars, Jet and CNA) customers specifically aren’t pleased. Edcon has amended its credit agreements to include a R22.80 service fee for existing and new accounts. If debtors refuse to pay the fee, their accounts will be frozen and then closed when they have settled their outstanding balance.
According to Edcon’s 2015 annual report, they have 3.496million cardholders. This means that if each cardholder is charged the R22.80 service fee per month, Edcon rakes in an extra R79.7-million per month…
Edcon has given their customers 30 days notice of the change to their existing credit agreement which will take course on the 4th of July. The maximum service fee permissible (R60) will be imposed if payments are dishonoured.
Financial advisers have long advised consumers to opt for a single, lower-interest credit card instead of spreading their debt across several store cards.
Other Card Fee Increases: