Poor financial planning skills and the lack of financial advice has left many South African consumers in poor financial standing, whereby they are ridden with debt and are struggling meet the interest payments on their debt, let alone payoff the debt itself. Indebted consumers are also failing to address the negative impact their ‘living for […]
18 May 2016
A fourth consecutive repo rate hike since November would be of utmost concern to consumers in light of the burden of increasing food, electricity and fuel costs, DebtBusters warned on Wednesday.
The Reserve Bank’s Monetary Policy Committee could announce a repo rate increase on Thursday, but economists are optimistic that the bank will instead keep rates on hold.
The Reserve Bank has raised the repo rate by a cumulative 75 basis points this year, with the latest 25 basis point increase to 7 percent coming in March.
This saw prime lending rates charged by banks to customers increased to 10.5 percent.
DebtBusters, one of many South African debt counsellors, said another increase in the repo rate looms as South Africa’s economy wobbles under the strains of political uneasiness.
Ian Wason, chief executive of DebtBusters, in a statement said: “While we recognise that it is imperative to curb inflation, an increase in the repo rate now will hurt the over-indebted consumer the most. We fear that these consumers are already being squeezed too much”.
DebtBusters said there were more than 10 million South Africans who have fallen into arrears on their debt repayments to date.
The debt counsellor recently said South Africans were R1.64 trillion in debt and were finding it very hard to get out of the “debt trap”, with people aged between 31 and 45 collectively owing 53 percent of all outstanding debt.
The latest National Credit Regulator statistics confirm a crisis situation where 54 percent of South Africa’s credit active consumers are struggling to pay their monthly debt obligations on time.
“Consumers with vehicle finance, mortgages, clothing accounts and credit cards are going to feel it the most. Having already felt the pressures of huge inflationary increases in their expenses, another increase in their debt repayments could be the last straw,” Wason said.
Article also Available on Jacaranda FM