Consumers who were excited by Black Friday fever and festive season shopping were cautioned against making reckless spending decisions.
They were encouraged by the National Credit Regulator to be smart, responsible spenders to avoid unnecessary future financial troubles. This by first drawing up a list separating ‘needs’ from ‘wants’, followed by their assessment of their budget to check whether their available money is enough.
If it’s not enough, consumers should consider buying on credit after taking into account credit-related costs they will have to pay overtime, the ability to repay the debt and then decide whether it is worth spending on credit.
The regulator’s acting manager for Education and Communication Advocate Kedilatile Legodi advised, “If you did not plan and budget for Black Friday, you are cautioned not to use credit because you won’t save as credit costs more. “When you buy on credit, you will be liable for related costs such as interest, monthly service fees, once-off initiation fees, credit life insurance and others.”
He urged consumers not to take for granted the value of planning and budgeting. “By drawing up a list, you avoid falling into the trap of buying things you don’t need. Budgeting will ensure that your spending is within your means.”
He urged for caution when spending against the temptation of the opportunity to buy goods on special and discounted prices. “Still, make use of this opportunity in a wise and responsible manner.”
The risks of buying on credit without a plan would also lead to inability to repay resulting in credit providers taking legal action which could negatively affect a consumer’s credit record. Such a record will lead to blacklisting, deny one access to future credit, will be charged higher interest rates in comparison to those who have positive credit records and also affect those seeking employment in financial related sectors.
Below are tips on wise spending from the regulator:
- Plan and draw up a list of your needs
- Set a realistic budget of what you can afford to spend and stick to it
- Check the items and prices before Black Friday or festive shopping for comparison of prices and ensure that you get a better deal
- If you decide to buy, stick to what is on the list
- If buying on credit, consider the related costs and that you may not be saving
- If buying on credit, consider your ability to repay the debt as you may sign up for financial troubles
- Remember, cash is king
- Remember, not everything is really a deal, some items may drop even further closer to Christmas
- Avoid buying food on credit
- Conduct a financial health check and get a free copy of your credit report from registered credit bureaus on the regulator’s website www.ncr.org.za
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