FNB low entry credit card helps businesses start their credit journey
Johannesburg - The First National Bank of South Africa (FNB) says it is seeing more SMEs using its low entry level credit card to kickstart their money management and lending journey.
Wandile Mnguni, FNB Commercial Transact Pillar, Product Head, says business owners are finding this solution to be quite flexible and convenient as it allows them to transfer their own funds into the credit card and use it as a cash flow management tool with a very low risk of going into debt.
The bank says between July 2022 and January 2023, the total prefunded spend on these cards has been R2.9bn. Furthermore, over 35% of all business credit cards currently issued to SMEs are now entry level with a credit limit ranging from R500 to R2000, it says, further adding that the credit limit on these low entry level credit cards can be increased overtime based on the financial behaviour of the business.
FNB says, on average, businesses are transferring up to R22 000 on of their own funds into the credit card.
Mnguni unpacks some of the benefits that make the entry level credit card popular amongst small businesses:
- Helps build credit history – this has proven to be an efficient way for many entry level businesses to build good credit history. Many started with the initial credit limit and have now increase them based on the needs of the businesses.
- Flexibility – multiple credit cards can be issued by the business owners to a number of employees.
- Help business move away from cash – this eliminates the risk of holding cash on the business premises. Furthermore, the business faces a lower risk if the card gets lost and lands in the wrong hands as the card can be stopped immediately.
- Tracking and controlling transactions - the business owner can track how employees use the card and also place limits on the amount to be used.
- Value added benefits – the business owner still receives all the benefits that come with a standard credit card. The benefits can help the business manage expenses. For example, using eBucks Rewards to pay for certain expenses as well as Slow Lounge access when traveling for business.
- Available emergency credit line – while SMEs prefer to use funds transferred into the credit card for business purposes, the credit limit available can also be used for emergencies should an unforeseen event occur.
“Businesses are increasingly finding the credit card to be convenient as it helps them and their employees with money management, while also kick-starting their lending journey in a responsible manner. Furthermore, we’ve been able to change the negative perception that may have previously been associated with a credit card instead, seeing it as a great business tool,” concludes Mnguni.