The festive season comprising excessive holiday spending for many South African consumers caught up in the festive frenzy of gift giving, luxuries and holidaying, leaves them in a financial predicament at the of January year on year, as they continue to owe lump sums of money to creditors they cannot afford to pay off.
28 November 2012
With over 8 million South Africans in arrears of 3 months or more, there was welcome relief by The Reserve Bank as interest rates were reduced by a further 0.5%.
DebtBusters, a debt management company said this was excellent news and would be welcome relief for the struggling consumer, as well as for businesses and the economy.
‘We are very pleased to see a further rate cut by The Reserve Bank at this meeting, and this will certainly help those with struggling to pay their debts. There are still too many households falling behind on their bond repayments and this is going to be welcome relief,’ said Luke Hirst, Managing Director of DebtBusters.
Consumers are also being warned not to go on a debt funded spending spree this Christmas and rather use the extra cash from interest rate cuts to pay off debt.
Hirst continues ‘With this years’ interest rate being reduced several times, consumers should make use of the extra money they have and use it to pay off their short term and usually more expensive debt. Interest rates may have further room to go down, but at some point rates will start going up and consumers do not want to have large debt balances when that happens.’