Be wise when borrowing money – NCR

January can be a difficult month, especially for those who did not budget and/or spend wisely over the festive season.

The National Credit Regulator (NCR) says many people are paid earlier in December and have a long wait until the next payday in January.

“This leads to empty pockets and many unpaid bills as these consumers start the year on a tough note,” said the NCR office.

“Consequently, many are being forced into taking excessive credit as the only option to pay for necessities like rent or mortgage, food, school fees and stationery, among others.”

The NCR’s education and communications manager Poppy Kweyama said besides the high cost of living, consumers might need to borrow excessively at this time of the year because of poor budgeting and last year’s reckless spending.

Citing the NCR’s statistics for the quarter ended September 2023, Kweyama said there had been a quarter-on-quarter increase of impaired accounts.

To avoid an impaired credit record, she advised consumers to borrow wisely and responsibly and to restrict credit to only what is necessary.

Kweyama added that during this time of the year, some consumers are desperate for financial assistance and may take out loans recklessly, even from unscrupulous credit providers.

The NCR has implored consumers who find themselves in this situation to be credit-smart and to avoid resorting to unregistered credit providers.

She advised consumers to borrow only from registered credit providers and only as much as they needed and only when they had to.

According to Kweyama, it is also crucial to plan how to repay the loans and most importantly, determine whether people can afford the repayments.

The NCR also encouraged consumers to understand their credit agreements and their terms and conditions before signing on the dotted line.

“Don’t sign if you don’t understand the Ts and Cs,” said Kweyama.

“Always ask for clarity and never pay an upfront fee.

“Never leave your ID or bank card with a credit provider in exchange for a loan.

“Not only is this practice illegal, but remember, to register and exercise your vote in the 2024 elections, you need to have your ID,” she cautioned.

The NCR said credit is expensive and advised people to familiarise themselves with the fees associated with the credit.

According to the National Credit Act, consumers can only be charged for certain fees when they take on credit.