The transition from a very relaxed holiday period to school or work means that many people tend to feel the financial pinch from their festive spending. The latest repo rate announcement from Reserve Bank Governor, Lesetja Kganyago, suggests that the future may be very bumpy as the rate remains unchanged at 7% and the economy remains unstable.
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It is half past three in the morning and Viwe cannot fall asleep. Ever since she was a student at university, using credit has been a fast and efficient way to fund her entertainment and living expenses. Now, five years after graduating, she is kept awake by what feels like a never-ending nightmare. Viwe is caught in a debt trap and needs a bad debt consolidation loan!
Each month Viwe has to find enough money to pay her many accounts. She juggles things around, paying one this month, skipping next month to pay another; robbing “Peter to pay Paul” and borrowing more to avoid legal action. All of this leaves her feeling confused and dizzy. By the next month she doesn’t know what is left in her bank account and can’t remember who she has paid and who she owes! With each month and year that has passed, Viwe has missed many of her monthly instalments to various credit providers and has started to accumulate additional interest and fees on her accounts in arrears. Her credit score has been severely impacted and she can no longer get credit. She is trapped!
Young professionals often enter the corporate world with little understanding on how to manage their money. Thinking about the need to save for a rainy day and even retirement is not yet a priority, and thus, the furthest thing from their mind.
Ian Wason, the CEO of DebtBusters, South Africa’s largest debt counsellor, warns on troubled times ahead for home loan providers “The increase of just 0.5% will have a massive impact on consumers with home loans. Not only are these consumers already faced with price hikes in electricity, rates and petrol, but many of them are overloaded with unsecured debt as well. This may be the final straw for many of them, and I would expect to see a large spike in defaults on the banks home loan books in the month ahead.”
According to the technical definition of a recession, South Africa is out the red, but the National Credit Regulator anticipates a total of 150,000 consumers to be under debt review by Christmas. We may have reverted back to our 3-6% inflation target, but to say this means we are out of the recession is not […]