Credit card usage in South Africa surges by 43%: what it means for consumers

STANDARD Bank has reported a 43% year-on-year increase in new credit card uptake over the past year.

According to the bank, this surge is driven by both bank-led growth initiatives and rising consumer demand, and it has been accompanied by notable shifts in how consumers use credit cards in South Africa.

The bank states that its analysis shows credit cards are rapidly becoming the preferred payment method for many South Africans, particularly for everyday essentials like groceries.

It further mentions that the top five spending categories among credit card users were groceries, restaurants, fuel, department stores, and clothing retailers.

“At first glance, it may seem that people are becoming heavily indebted and relying on credit cards for basic living expenses, but that’s not the case. We’re seeing more customers using their credit cards as their primary transactional accounts rather than just as a credit facility. Instead of reserving them for big-ticket purchases, they are using their credit cards to earn rewards and build their credit profiles,” said Tumelo Ramugondo, head of credit cards at Standard Bank.

Ramugondo points out that although new credit card take-ups have increased, the average card limit has remained stable over the years, indicating that customers are still conservative when it comes to using credit over debit cards. They prefer to keep limits at a manageable level. “However, credit limit increases remain central to our strategy for existing customers, and we’ve simplified the application process through our banking app,” says Ramugondo.

The financial services provider adds that a growing number of customers with both cheque and credit cards are choosing credit for their daily purchases, with 30% using their credit card for more than half of their transactions.

Another 11% rely entirely on credit cards for all purchases, without using their cheque card at all, the bank says.

“Many of our customers prefer using credit cards to benefit from higher uCount Rewards, as well as product-related benefits such as airport lounge access and various lifestyle perks. The credit card gives them maximum benefits,” says Ramugondo.

He further notes that customers are also using credit cards strategically to manage their cash flow and take advantage of interest-free periods.

However, despite overall growth in the number of customers using credit cards, the average transaction value has decreased, suggesting that consumers are becoming more price-conscious, he adds.

Furthermore, the growth of digital wallet payments has led to customers swiping more often for smaller amounts. “People are still spending, but they are being more selective. We see customers opting for lower-priced items, likely due to the financial pressure caused by past interest rate hikes. The recent repo rate cuts in November 2024 and January 2025 should provide some relief and may boost spending in the coming months,” says Ramugondo.

According to Standard Bank, the way people pay with their credit cards is also evolving. 26% of all credit card purchases are now made online, with e-commerce transactions steadily increasing as more retailers move to digital platforms.

For in-store purchases, the adoption of tap-and-go payments has accelerated, with 76% of transactions now contactless, the bank says.

“Customers appreciate the speed at checkout, the reduced need to carry cash, and the extra security that contactless payments provide. Unlike traditional swipes, contactless transactions minimize fraud risks because card details are encrypted and never exposed,” adds Ramugondo.

Seasonal spending trends remain strong, with spikes in spending observed between March and May, driven by school holidays, Easter, and public holidays, according to the bank.

However, the most significant surge occurs in November and December, as Black Friday promotions and festive season shopping drive up transaction volumes. "Black Friday has become a major event on the South African retail calendar. Customers plan their purchases around these deals, and we see a sustained increase in spending that carries through to the festive season," says Ramugondo.