Watch your debt level over Christ­mas

CityPress - - Busi­ness - *In­stal­ments of of to­tal fees which in­clude cost and to­tal in­ter­est of

Mari Blu­men­thal

R77.50

Think twice this Christ­mas be­fore you add that ex­tra packet of chips or bot­tle of cooldrink to your trol­ley – es­pe­cially if you are pay­ing by credit card.

Economists are warn­ing that in­fla­tion and an in­crease in the in­ter­est rate will hurt con­sumers, and will make it even more dif­fi­cult to pay off debts.

The chances of the Re­serve Bank in­creas­ing the in­ter­est rate next year are high, es­pe­cially now that the Fed­eral Re­serve has raised in­ter­est rates for the first time since 2009.

San­isha Packirisamy, econ­o­mist at Mo­men­tum, said South Africa was by no means ready for the fall­out from the Fed­eral Re­serve’s de­ci­sion.

“While South Africa is still reel­ing from the re­cent harm­ful Cabi­net moves, weak­ened in­vestor con­fi­dence will pre­vent the rand from gain­ing mean­ing­ful trac­tion,” she said.

The weaker rand has not been that vis­i­ble in our shop­ping trol­leys yet, but Packirisamy said the Re­serve Bank had warned that the sus­tained weak­en­ing of the cur­rency would mean in­fla­tion ac­cel­er­at­ing above the bank’s in­fla­tion tar­get of 6%.

Karin Muller, head of San­lam Growth Mar­ket So­lu­tions, said most peo­ple never con­sider what credit re­ally costs them.

San­lam has cal­cu­lated the costs of credit card debt for all those last-minute panic pur­chases – the R15 000 you spend on av­er­age on your credit card this fes­tive sea­son can end up cost­ing you R23 000 once you have paid the card off.

Muller’s ad­vice to con­sumers is: “Make sure you know what in­ter­est you pay on your credit card and con­sider it as an ex­pense in your bud­get.”

Hol­i­day ac­com­mo­da­tion on yo r credit card

In­ter­est rate:

Num­ber of months: In­stal­ments of R633.60 x 36, which in­clude cost of to­tal fees R3 789 and to­tal in­ter­est of R4 020.60

Christ­mas gifts on yo

R86.12 x 12, R376.40

r store acco

In­ter­est rate:

Num­ber of months:

nt

Graph­ics24

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