The National Credit Regulator (NRC) urged citizens to first settle their debts and save before spending their extra money.
“If you have to spend the bonus, do so cautiously,” NRC’s Jimmy Golele said in a statement.
This advice is drawn from increases in the cost of living experienced in 2018 including on petrol, VAT, interest rate and electricity making it very difficult for consumers. This at a time when the total outstanding gross national debt from consumer credit stood at R1.80 trillion in June 2018. “This consumer debt is derived from among others, mortgages, vehicle finance, unsecured credit, store and credit cards, overdrafts and short-term loans.”
Golele said the festive season is characteristic of unnecessary overspending caused by excitement with bonuses and stokvel payouts. “Save in anticipation of next year’s expenses like school uniforms and registration fees, transport and many other costs than find yourself cash-strapped.
“If need be, only use registered credit providers than unregistered lenders (Mashonisas) to avoid finding yourself in a nightmare.”
This he said in reference to their practice of enslaving debtors by confiscating identity documents, bank, SASSA cards and their pin numbers and, withdrawing the money first leaving them with insufficient balances for the entire month. “With their high and unlawful interest rates they charge, consumers battle to finish repaying loans and remain dependant on Mashonisas for a long time.”
Also, Golele advised consumers to be wary of the ‘buy now, pay after three months’ deals. “They make consumers to incur additional credit in those three months. “They should not be afraid as it is their right to request for a pre-agreement statement and quotation when applying for any credit.
“It will them inform on the full cost of the credit before signing the contract and allow one to shop around and make comparisons.”
He advised them to settle existing debts saying, helps to avoid being blacklisted which should be lifted from the credit report once the balance is paid out, giving the consumer a better chance of getting new credit.
He urged those who lost their jobs while in credit to inform their lenders and those in credit with life insurances to do so as they are obliged to pay the consumers’ debt either in full or a portion if they died, are retrenched or disabled.
The following are consumers’ tips from the NRC:
- Regardless of the festive season, draw and stick to a monthly budget with all the debts like rent, electricity, water, insurance, transport, gifts and entertainment
- Prioritise paying your home loan and/or rent first
- Use a list when shopping to avoid buying unnecessary items
- Avoid unplanned and unbudgeted holidays
- Speak to a financial advisor before cancelling any insurance policies
- Only borrow money for an affordable necessity
- Start planning and saving now for next year’s projects like holidays, renovations, studying and big sales
- Contact a registered debt counsellor for assistance when struggling with debt.
