Credit Card Act General Q&A

Credit is one of the cornerstones of modern capitalism that lubricates the economy and promotes commercial activity. However, credit enables people to spend money they don’t have, spend more money than they earn, use credit for ordinary purchases, use credit even when they have cash and use debt to pay off debt. The use of credit and poor money management skills often leads people into a situation of over-indebtedness where they are unable to service credit agreements.

The National Credit Act (35 of 2005) is part of a comprehensive legislation overhaul designed to protect the Consumer in the credit market and make credit and banking services more accessible. The National Credit Act (NCA) was introduced “to promote and advance the social and economic welfare of South Africans, promote a fair, transparent, competitive, sustainable, responsible, efficient, effective and accessible credit market and industry, and to protect Consumers.”

Although seemingly complex, the National Credit Act aims to simplify many of the grey areas surrounding the South African credit market. The NCA like other legislation such as the Financial Advisory and Intermediary Services Act (37 of 2002) and the Financial Intelligence Centre Act (38 of 2001) that affect the financial services industry help to enhance control for a better and more responsible credit practices and industry.

The NCA in brief

The main purposes of the National Credit Act can be summarised as follows:

To promote a fair, competitive, accessible, equitable and sustainable credit market.
To educate consumers so that they are empowered to make informed choices, borrow responsibly and within their means.
To enforce affordability assessments within the lending process to prevent reckless lending and/or borrowing.
To protect consumers who feel they have been unfairly treated in a credit agreement by giving them access to a National Credit Regulator and the National Consumer Tribunal.
To provide a debt counseling process for consumers who are not able to find a solution for their inability to repay their debts, in conjunction with their credit providers.