How Interest Actually Works on Credit Cards and Store Accounts

Credit cards and store cards fall into a category the National Credit Act calls a "credit facility" — revolving credit with no fixed end date, where you can keep drawing on it as you pay it down. The NCA caps how much interest a credit provider can charge on this type of credit, but that cap isn't a single fixed number.

The rate moves with the repo rate

The NCA caps how much interest a credit provider can charge on a credit facility at the repo rate plus 14% per year, set out in Regulation 42(1) of the National Credit Act Regulations (Government Gazette 39379, Notice 1080, 6 November 2015, effective 6 May 2016). Because the repo rate changes when the Reserve Bank's Monetary Policy Committee meets, the legal maximum moves with it — at the 7.00% repo rate as at July 2026, that's a ceiling of 21.00% per year.

What matters more for your actual card: card interest rates are risk-based, not a flat rate set at the NCA ceiling. A bank prices your card according to your credit profile and its own risk assessment. A higher rate on your card usually means the bank has assessed you as higher risk — not that every card sits close to the legal maximum.

Why this rate is so much higher than a bond

A bond is secured — if you stop paying, the lender can repossess the property and recover most of its money. A credit card has nothing behind it except your promise to pay. Lenders price that extra risk into the rate, which is a large part of why revolving credit costs so much more per rand borrowed than a mortgage.

Why the minimum payment is a trap, not a plan

Store and credit cards typically only require a small minimum payment each month. Paying only the minimum means most of your payment goes toward interest rather than the balance itself, especially early on — the debt can take years to clear and cost far more than the original purchase, even without ever missing a payment.

What actually reduces what you pay

• Pay more than the minimum whenever you can — even a modest extra amount above the minimum meaningfully shortens how long interest keeps accruing.
• Pay off the highest-interest balance first if you're carrying more than one — this is usually the fastest way to reduce total interest paid across everything you owe.
• Understand the in duplum rule (covered in lesson 5) — a real legal protection that limits how much total interest can ever be charged on a single debt.