Budget and beware of festive debt traps
‘TIS the season of giving, and making bad debt.
For this reason, the National Credit Regulator (NCR) said, reckless spending over the festive season may lead consumers directly into the trap of unregistered credit providers, informally referred to by many as “Abomashonisa”.
“Desperation to borrow money to cope with January expenses will make you a target of unregistered credit providers who would usually advertise using phrases such as ‘blacklisted consumers welcome’, ‘cheap credit’ and often require you to pay a fee before they pay out the alleged approved loan,” NCR acting manager for education and communication Kedilatile Legodi said.
“Unregistered credit providers usually charge excessive interest rates and fees that are not in line with the National Credit Act. ‘They also use unlawful tactics to collect on their debt such as retaining consumers’ identity documents, bank cards/PIN numbers, Sassa cards and others,” Legodi said.
Legodi added that some consumers would receive their December salaries earlier than usual and others would receive bonuses, which often created the temptation to buy more.
However, consumers have been strongly encouraged to draft a budget to ensure that they spend what they have.
“Consumers must remember that the salary paid in December is the same income that has to cater for January expenses such as school fees, school uniforms, food, transport and others. Failure to consider January expenses before spending during the festive season will indeed make January feel longer and financially stressful,” Legodi said.
The NCR shared its tips for spending and saving wisely: Plan and draw up a list of your needs.
Set a realistic budget for what is on the list.
Prioritise your home loan, rent and school fees. Where possible, pay more.
Buy school uniforms and stationery now when you have money.
Start saving for next year’s projects such as holidays, renovations, studying, retail sales/specials and do not rely on credit for this.
If you are battling with your debts, contact a registered debt counsellor for assistance.