Credit cards remain one of the most misunderstood financial tools in Ghana. For many people, the idea of using one immediately brings to mind high interest rates, hidden charges, or the possibility of falling into debt. As a result, uptake has been limited, and those who do own credit cards often use them with hesitation or avoid them entirely.
These concerns are not without cause. Like any financial product, credit cards require responsible use. However, much of the hesitation surrounding them comes from misunderstanding rather than misuse. Important features such as interest-free periods, flexible repayment options, and cashback rewards are often overlooked or poorly explained.
This article addresses five of the most common myths about credit cards in Ghana. It aims to provide clarity on how credit cards work and why, when used with care, they can serve as a practical and cost-effective alternative for managing short-term expenses.
Myth 1: “Credit cards are only for the rich”
One of the most persistent myths about credit cards in Ghana is that they are reserved for the wealthy or high-income individuals with elite banking status. This perception has been reinforced by years of selective marketing and limited public education about who credit cards are designed to serve.
In reality, credit cards are intended for a broad range of customers. These include salaried workers, self-employed professionals, and business owners who need flexible access to short-term credit. Eligibility is typically based on steady income and the ability to repay, not on social standing.
Credit cards are not luxury products. They are practical tools that help individuals manage day-to-day spending, cover planned expenses, and benefit from interest-free repayment periods. When used with care, they can support better cash flow management without requiring the use of savings or more expensive credit options.
Myth 2: “Credit cards always lead to high interest”
Another common misconception is that using a credit card automatically results in interest charges, regardless of how or when the card is used. This belief often discourages individuals from applying for a credit card, even when it could serve their financial needs more efficiently than other borrowing options.
The truth is that interest on a credit card only applies when the full outstanding balance is not repaid within the interest-free period. For example, Absa Bank’s credit cards offer up to fifty-five days of interest-free spending. If the full balance is repaid within this time, no interest is charged on the purchase. This is significantly different from personal loans or salary advances, which begin to accrue interest immediately.
In many cases, customers are not aware of this feature, and the assumption of unavoidable interest discourages them from learning more. Clear communication around repayment timelines and conditions is essential to helping customers use credit cards more confidently and avoid unnecessary costs.
Myth 3: “Using a credit card will land you in debt”
Another common belief is that simply owning or using a credit card will eventually lead to debt. This perception often stems from hearing of others who struggled with repayments or who found themselves unable to manage their spending after using a credit card.
However, a credit card in itself does not create debt. It is a financial tool, and like any tool, its impact depends entirely on how it is used. When repayments are made on time and in full, there are no interest charges, and no debt is carried forward. Credit cards can help with budgeting by allowing users to track spending and plan repayment more precisely.
What matters most is setting clear limits, avoiding impulse purchases, and staying within one’s ability to repay. Used with care, a credit card can support financial discipline and offer more control than cash or short-term loans that do not offer structured repayment timelines.
Myth 4: “Other options are always cheaper”
It is often assumed that other short-term borrowing options, such as personal loans or salary-linked advances, are always more affordable than using a credit card. While this may seem true at first glance, the actual cost depends on how each option is used and repaid.
Consider the example of Michel, a teacher at a senior high school in Accra. When he needed funds to pay for an online course before payday, he took a short-term loan of GHS 2,000. The lender applied an interest rate of six per cent, which meant Michel paid an additional GHS 120 within thirty days.
A colleague of his, who had recently acquired a credit card, used it to pay for the same course. Because he repaid the full balance within the fifty-five-day interest-free period, he was not charged any interest. In addition, he earned GHS 10 in cashback for the transaction.
In this case, the credit card turned out to be the more cost-effective option. It offered both flexibility and savings, but only because it was used with care and repaid in full within the interest-free window. The point is that no one financial product is always better than another, but understanding the terms and using them responsibly makes all the difference.
Myth 5: “If I do not have cash now, I have no choice but to miss the deal”
There is a common belief that if you do not have enough cash on hand, you have no choice but to forgo an opportunity. This perception is especially common during promotional seasons or when facing a limited-time offer. Without access to immediate funds, many people feel they must wait. In doing so, they often miss the benefit entirely.
Take the example of Derrick, who had been planning to buy a freezer during a seasonal sales promotion. The discounted price was GHS 6,000, but he did not have the full amount available at the time. Rather than explore a financing option, he chose to wait until payday. By then, the promotion had ended, and the price had returned to GHS 10,000.
If Derrick had used a credit card and repaid the full amount shortly after payday, he could have secured the lower price without paying any interest, provided the repayment was made within the fifty-five-day interest-free window. He would also have earned cashback on the transaction.
This example shows that credit cards can be helpful for time-sensitive purchases, particularly when repayment is planned. Rather than missing out, credit card holders may be able to take advantage of opportunities as they arise, without resorting to more expensive forms of borrowing.
What makes credit cards different?
Credit cards are often compared with other forms of short-term borrowing, but they offer a distinct set of features that make them worth understanding on their terms.
First, a credit card provides access to a revolving line of credit. This means that as you repay what you owe, the available limit is restored. Unlike a fixed-term loan, where funds are disbursed once and repaid over a set period, a credit card offers ongoing access to funds within the approved limit.
Second, credit cards typically come with an interest-free period, which can extend up to fifty-five days, depending on the billing cycle. When used for planned spending and repaid in full within this period, no interest is charged. This makes it possible to manage cash flow without incurring additional borrowing costs.
Finally, many credit cards offer rewards such as cashback on everyday transactions, both in-store and online. These small incentives, while modest, can add up over time and provide real value on purchases you would have made anyway.
These features combine to make credit cards flexible, reusable, and cost-effective, provided they are used with care and a clear plan for repayment.
How to use a credit card wisely
The benefits of a credit card only become real when it is used with intention. This means planning how you will repay before you spend and using the card in a way that supports your overall financial habits.
The most effective use of a credit card is for planned, routine expenses such as groceries, fuel, utilities, or school fees. These are payments you would be making anyway, so placing them on your credit card and settling the full balance within the interest-free period allows you to benefit from the flexibility without incurring any interest.
Timely repayment is essential. Paying off the full balance before the due date is the best way to avoid interest and maintain control of your finances. It also builds a track record of responsible credit behaviour, which can support your financial standing over time.
Some credit cards also offer cashback rewards on everyday purchases, turning regular spending into modest savings. While these rewards should never be the main reason for using a credit card, they are a useful bonus when managed carefully.
It is also possible to use a credit card for unexpected expenses, such as medical needs or urgent repairs. In such cases, a credit card can provide access to funds in moments when other options may take longer. However, it is important to plan repayment immediately and avoid treating the card as a substitute for long-term savings.
Used in this way, a credit card becomes a tool for managing timing, not creating pressure. It offers flexibility but only works well when combined with clear discipline and consistent repayment.
Rethink, don’t reject credit cards
Credit cards are often dismissed in Ghanaian financial conversations, largely because of misconceptions or past experiences shared without the full context. But when the facts are clear and the product is well understood, credit cards can be a helpful and responsible way to manage short-term expenses.
They are not designed for extravagance. They are designed for flexibility. With proper planning, timely repayment, and a clear understanding of how interest-free periods work, a credit card can provide both convenience and control. It is not about replacing other financial tools but about knowing when a credit card is the right one to use.
The key is to shift the conversation from fear to knowledge. Credit cards are not to be feared or ignored. They are to be understood and used with intention.
Source:
Muhammad Shamsudeen Ibrahim, Product Manager: Cards, Absa Bank Ghana LTD.
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