How can I plan financially for my child’s education? All parents want their children to achieve their fullest potential and most agree that education is key. But a good education comes at a price. From primary school through to university, education bills will be one of your heaviest financial burdens as a parent. Fortunately, there […]
19 May 2016
Reserve Bank Governor Lesetja Kganyago today announced that the repo rate will remain unchanged at 7%. While this news will come as a relief to South Africans, the knock on of the previous three consecutive increases totalling 100 basis points since November 2015 appears to have already taken its toll.
Ian Wason, CEO of DebtBusters, explains “Previous increases in the repo rate impacted all South Africans, but those with high levels of debt felt it most. South Africans with vehicle finance, home loans, personal loans, store accounts and any other debt linked to the prime lending rate, have already been paying more towards their debt this year.”
Wason says, “With the cost of food, electricity, fuel and the general cost of living on an upward trend, consumers have been struggling to manage and afford their monthly expenses. This and three repo rate increases (since November) has proven fatal for many that were living on the edge of over-indebtedness. Suddenly, purchasing basic food items such as bread or milk is a struggle, forcing them to seek alternate sources of temporary income; the quickest being applying for or using more credit to get by on a day to day basis.”
“Payday loans (which have come under a lot of criticism recently) have been providing consumers with a quick and convenient way to access cash. Unfortunately, very few are able to stop at one pay day loan. Once consumers start along the road of requesting multiple payday loans, month after month, they very quickly become caught in a difficult to get out of debt spiral,” says Wason.
While regulators have been actively implementing regulations to control and prevent reckless lending and expensive lending, Wason believes the root cause of the problem is not being addressed. “The lack of financial education in South Africa is where we need to start focusing. This is the real cause of the financial problems South Africans find themselves in”, says Wason.
Wason adds, “The massive spike in Debt Counselling queries in May is proof that the Reserve Bank Governor’s announcement today is too late. The number of consumers that have contacted DebtBusters for assistance this month has more than doubled in comparison to April.”
Wason ends with some advice for those that have breathed a sigh of relief today, “Consumers that are heavily reliant on credit must tighten their belts and find ways to pay down their debt. The wave of increases in inflation and the repo rate is not over.”
For pictures, the latest Debtometer report and further comment kindly contact:
Marketing Co-ordinator, IDM Group
Cell phone: 083 518 1557
For consumers looking for financial assistance, please contact DebtBusters on 086 999 06 06.