When you buy things on credit, you can end up paying for expensive insurance called credit life, which comes into effect if you are unable to meet your repayment commitments.
Credit life insurance providers sometimes charge as much as R57 for every R1 000 borrowed.
In August, new government regulations will cap the amount companies can charge at R4.50 for every R1 000 borrowed.
However, this will only apply to new credit life policies, so make a note to switch to a cheaper credit life provider in two months so that you ensure you save yourself money.
Sasha Knott, the CEO of credit life insurance company Switch2, says: “Consumers should not be overpaying for their credit life insurance, but many are also unaware that they can switch their accounts when another policy offers them a better rate for the same level of protection – and they cannot be penalised for making that choice.”
Knott says that every policy has a base minimum, but consumers don’t know that they are not tied into policies offered by the retailer or credit card company.
“We have saved some customers as much as R300 a month, or R3 600 a year, just on credit life premiums,” she says.