If you’re struggling to find a credit card with a reasonable interest rate, you’re not alone. Many consumers today are shocked to see interest rates hovering around 20%—even for those with solid credit scores and manageable debt. For example, someone with a home loan of R1.6 million, no overdue payments, and a credit score of 861 may expect favorable rates. But often, banks don’t see it that way.
One key reason for higher credit card rates could relate to your existing home loan. Even a large home loan can influence how banks view your overall financial risk. Banks tend to look at your total debt and income when deciding how risky you are to lend money to. An access bond may also add another layer of complexity to your financial profile. These loans allow you to take out money against your home’s value, which could make lenders more cautious about offering additional credit.
So, why do some people with multiple debts, such as personal loans and car payments, receive lower rates? This situation often comes down to how lenders assess individual risk. Each person has a unique financial story, and banks weigh these factors differently. Lenders may view the ability to manage various debts as a sign of financial responsibility. In contrast, having a large home loan might suggest you are at high risk for overextending yourself.
Despite the frustration of high credit card rates, experts indicate that it is possible to secure better deals. Exploring options like online platforms or credit unions may offer lower rates compared to traditional banks. Some financial institutions, such as Investec, provide credit cards with rates closer to the prime rate—but they often require a deep dive into your financial history before granting approval. Others, like FNB’s private wealth accounts, may offer even better limits, but often demand significant income and assets.
For responsible credit use, it’s essential to consider how you handle balances. If you tend to pay off your credit card in full each month, the interest rate may not be a major concern. Therefore, rather than stressing over high rates, focus on managing debt efficiently.
Ultimately, understanding interest rates and how lenders view your risk is crucial. With the right approach and by exploring diverse lending options, you can improve your chances of finding a better deal despite a few bumps along the way.