Friday | 03 April | 2020
By Nico Strydom
Some of South Africa’s largest commercial banks have announced that they will try to assist consumers who are already struggling or will struggle financially, in every possible way.
The government and business sector are also looking at the possibilities of curbing the economic impact that the outbreak may cause.
Numerous South Africans however are living in fear due to the spreading of the virus and the unprecedented threat it contains for the country and the rest of the world. This has among others resulted in panic purchasing.
The National Credit Regulator (NCR) have warned consumers to conduct themselves with caution and self-control when spending money during this time.
Nomsa Motshegare, executive head of the NCR, says that consumers need to make responsible financial decisions. “Consumers must remember that credit comes at a cost and that credit needs to be paid back.”
Motshegare also advises consumers who are anxious about their finances to be proactive in order to control their finances and debt. “Consumers are advised to not ignore their debt, but to contact their credit providers. Consumers can ask a debt advisor for further assistance should they have too much debt.”
Benay Sager, head of business with the debt counselling group DebtBusters, emphasises that due to uncertainty they should not incur more debt.
“People naturally react differently. Some continue going about their business as usual and possibly put themselves and others in danger, while others have an investment mentality and make panic purchases to stock up on food, cleaning and hygiene products and medication.”
According to Sager, the different reactions indicate the uncertain times we are in. He says uncertainty causes people to feel vulnerable and act out of character. This includes financial decisions. “People in certain sectors are of course concerned that they could lose their jobs or income. A difficult time could also be in the offing for small business undertakings in the next few months.”
Some banks have already announced that they will help their clients with a so-called “paid holiday”. Sager emphasises that consumers should however first contact financial institutions before they decide to skip monthly repayments.
“This is not a breach of contract but can influence your credit rating. As a result you might in future struggle to borrow money and in these uncertain times it is not a good position to be in.”
Sager says it might be tempting to borrow money in the hope that it could lead to a ‘paid holiday’. If you already have debt and borrow more money because you believe that money lenders will give you one or another form of a paid holiday, you are in effect plunging yourself deeper into debt.
If you are struggling to meet your monthly repayments, you need to get help as soon as possible. “If you are already struggling to pay back debt, it will make an already unpredictable situation even more difficult to navigate.”
National Credit Regulator: https://ncr.org.za/
* All information was correct at the time of publication.