Credit lockdown
South Africans from all walks of life are under severe financial pressure due to the chaos the COVID19 virus has unleashed.
Anxiety and worry are understandable emotions at this time, as we face an unknown future. Having said this, it is also important to take control of the things we can manage, such as our immediate spending patterns.
How to manage your credit: Flatten the credit curve:
- Only use credit facilities if absolutely necessary;
- Contact your credit provider or bank before using credit facilities. Ask them if any form of payment relief is offered;
- Ask your credit provider/bank now for a reduction in the interest rate charged;
- Only use credit for necessities;
- Set an amount of credit to use and adhere to this limit;
- Pay a little more than the minimum amount payable at the end of the month.
Warning against loan sharks:
Due to the present financial pressure, you could be tempted to take out loans from the formal or informal sector, but please be very careful. The long term effects of lending money are far-reaching and very costly.
Informal money lenders are alive and well in our credit landscape in South Africa. Their no-holds-barred loan sharking will probably remain around forever, as long as there are customers.
But, be aware:
- They prey on the more vulnerable people in our country, offering help to lift financial burdens, but in the long run these loans place huge stress and pressure on families.
- Excessively high interest rates, ranging from between 30 – 50% interest, can be charged.
- Once in the money lending cycle, it becomes increasingly difficult to get out of it – so try to avoid this at all costs.
- If you want to lend money and charge interest, you must be a registered credit provider.
- Loan sharks are also known to harass you at your place of work or home, if you fail to repay the money as required.
- Consumers are advised to lodge a complaint with NCR (National Credit Regulator) on ncr.org.za
- If loan sharks are threatening you, report it to the police.