And wouldn't it be great if your POF was available in other currencies - so that if you were traveling in the Pacific you could use your POF to buy something priced in Tarongan Conch Shells? And if you exceeded your POF limit - your manager wouldn't bounce your cheques and screw up your credit record?

And how about if your bank manager actually rewarded you for using your POF - instead of charging you management fees, deposit fees, debit order fees, cheque-bouncing fees. How about s/he offered to buy you a holiday instead

And wouldn't it be easier to reconcile your cheque account if you could actually see the name of your supplier on your statement - instead of having to pay your bookkeeper to find out what cheque 1276 for R5675.25 was issued for?

How about if your bank paid YOU interest on your credit balance - at a rate double that of your savings account? Sounds too good to be true - doesn't it? But that's because we occasionally stumble on an opportunity - but we pick ourselves up and carry on regardless! [My apologies to Mr Churchill.]

Every time I mention the word 'credit card' to a group of seminar delegates - they have a knee-jerk response - INTEREST RATES. And since we all accept this to be true - and we all know what a credit card is - we look no further. But let me introduce a few ideas about credit cards that are incredibly useful for us business owners.

We all complain about bank charges - but you won't pay any transaction charges when you use a credit card. The supplier pays the 'fee'. [And s/he is really happy to pay because s/he is getting money quickly.] Right now, far more suppliers will accept payment by credit card than by cheque. So why pay so much money for a normal overdraft facility? In our enthusiasm to ignore credit cards because Suze Orman says they're bad, we forget that they are a much better transactional mechanism than cheques!

And if you run a personal overdraft - your bank manager is going to be really unhappy if you open a new overdraft elsewhere. Whereas your credit card supplier doesn't care. And your credit card supplier gives you the first 55 days free of interest.

Speaking of interest - credit card interest is high isn't it? But why not take a step back and look at the TOTAL COST of your cheque account Vs the total cost of a credit card? That approx. 7% interest saving on your overdraft must be balanced against the R25 cost per cheque, the cash deposit fees, the cheque book fees, the debit order fees, the management fee [where your bank manager charges you an annual amount when he meets you to allocate your overdraft], the mistake fees [where you pay R50 for a bounced cheque because your bookkeeper forgot to deposit money into your account], the time, petrol, parking and stress to visit the bank to set up the overdraft, the cost of pledging your personal assets to secure the overdraft. I'm sure there are a few more I haven't thought of - your additions welcome.

Now look at a credit card facility again. Simple to set up - simply fill in an online form or fax or mail it. And you're allowed to have as many as you want- from as many banks as you want. And unlike an overdraft - where if you have one nobody will touch you - the more credit cards you have the more banks want to send you another one.

The perennial gainsayers amongst us will quibble over the cost of the credit card facility - the card issuing fee - especially if you have a whole bunch of them. But the cost of all the cards I carry [6] is less than 2 months of current account service fee. So where's the comparison?

In contrast to a cheque account - if your credit card supplier 'bounces' something you don't get penalized by having your credit record tainted. The supplier simply does not get his money. And it doesn't cost you R50 for the privilege!

What if you need a BIG facility - simply add 10 cards together! That gives you between R50,000 and R100,000 immediately [as well as between R100,000 and R200,000 to buy bigger items on 'budget' account - kind of like your personal longer term loan facility.] And YOUR risk is spread amongst a variety of bankers - rather than having your financial future in the hands of a single stranger. [Check out a previous article on various credit card banks and service levels.]

"What about the free holiday my bank manager isn't giving me?" I hear you cry. Well, almost every card can be linked to some 'reward package' - such as SAA's Voyager program [free frequent flyer miles] or eBucks [FNB]. And if you use a personal card on an imprest basis to pay business expenses - you personally get the rewards. [That's when the firm refunds your personal card for business expenses incurred each month.] The business saves by issuing fewer cheques. Admittedly the rewards aren't overwhelming [1 frequent flyer mile per R5 spent] but it's a hell of a lot more than your regular bank manager is giving you! Your incoming invoices are still proper VAT invoices issued to your firm. But no supplier on earth really cares who actually pays the bill - as long as it's paid on time.

Have you ever tried to pay for something on the Internet using a personal cheque? Or maybe tried to get a store in London to accept your cheque drawn on ABSA Braamfontein? Yet a credit card is accepted almost anywhere, in almost any currency - and yes - you can even use it to buy Tarongan Conch Shells!

I honestly can't see why personal cheque accounts still exist. A credit card allows much more flexibility, for free. And you can even draw bank guaranteed cheques from an ATM if you insist - for somewhat less than the cost of a cheque out of your cheque-book.

But what I really like is the ability to see where my money has gone each month. Because that way its much easier to spot the errors.

And, of course, while I am running all my company expenditure via my personal credit card - I am building up a HUGE personal credit record with my credit card supplier. Makes you think doesn't it?

This article is specifically about personal credit cards - not business cards. When you apply for a business credit card you will be asked to sign a surety form - and in doing so you will be signing away every single personal asset you have acquired until now. Simply doesn't make sense, does it? But that's the subject of a complete seminar!

© Peter Carruthers, www.petesweekly.co.za

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