TIP

CityPress - - Business -

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.

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