How To Use Your Budget Facility Smartly
17 AUGUST 2023
Budget or straight? Your RCS Store Card offers both options when you pay for purchases. Here’s how they work.
Buy Small With Revolving Credit
Based on your individual circumstances, you may be granted credit ranging from R1,000 to as much as R50,000 on your RCS Store Card. (You can also request to increase your credit limit, by calling our Contact Centre on 0861 729 727.)
That credit amount is known as your revolving credit facility. When the person at the counter asks you if you’re paying “Budget or straight?” the “Straight” they’re talking about is really your revolving credit. “Budget” is the option to charge the amount to your credit facility and pay it back in instalments over a period of time, if this suits you.
With revolving credit, when you pay your account, your credit becomes available again. For example, if you have a R1,000 credit limit and you buy a R200 T-shirt, you’ll still have access to R800 of credit. When you pay your account, you’ll pay the R200 and your available credit will go back to R1,000.
The smart way to use your revolving credit facility is to pay back the amount that you have spent within the 55-day interest-free period. That way, you’ll only pay what’s on the price tag, without incurring any interest.
Revolving credit is best used for everyday purchases that you can pay off at the end of the month when you get your pay cheque. So if you’re paying for groceries, for example, choose “Straight” when the teller asks “Budget or straight?”. The amount will then be deducted from your available credit, and although you’ll walk out of the store with your groceries in your trolley, you’ll only pay for them later in the month when you pay your RCS Store Card account.
It’s always a good idea to draw up a personal budget that includes all your monthly expenses. Then allocate yourself a budget amount within that, which you can spend on your RCS Store Card for groceries, treats and so on. Then stick to that allowance!
Buy Big With A Budget Facility
If the teller asks, “Budget or straight?” and you choose “Budget”, the maths changes. If you use the budget facility on your RCS Store Card, you’ll have the option of paying the amount off over 12 months or 36 months.
For example, let’s say you move into a new place and you need a new fridge. If the fridge costs R4,000, you might not be able to pay the full amount in one go when you settle your RCS Store Card account on payday. So what do you do? You pay it off in instalments over that 12- or 36-month period, with interest. The advantage of this is that you know what you owe on this item, you factor it into your budget and pay it off until it’s done.
Here’s another example. Your washing machine breaks. You need a new one, but you don’t have R5,000 in your budget to pop down to the store and buy one. In this case, you could use the budget facility on your RCS Store Card to buy the appliance today and pay it off in manageable amounts over 12 or 36 months. The amount that you pay each month will be the purchase price plus interest, divided by the number of months that you decide to pay it off. So it will cost you more, but you can get your washing machine today (and clean your dirty laundry this evening).
“Budget or Straight?”
Let’s recap, then.
The savvy way to use your RCS Store Card is to choose “Straight” (revolving) credit for your everyday purchases. If you’re buying something small at one of the 30,000-plus stores in the RCS shopping network, set a budget and spend what you can afford to pay back within that 55-day interest-free period. That way you won’t have to pay on the day, but you won’t incur any interest either.
Use the budget facility for bigger purchases, like fridges, washing machines, lounge suites, and so on, and pay back a set amount per month over time. That way you’ll know exactly what your monthly commitment is, and you’ll be able to factor that into your personal household budget.
At RCS we believe in empowering customers like you with the financial tools you need to make things possible. RCS cares about you, and about responsible credit usage. So be savvy with your RCS Store Card, and ensure you’re using its credit facilities appropriately – and paying them back the smart way.