With the festive season picking up steam, and the anticipation of a 13th annual paycheque, the National Credit Regulator (NCR) is urging consumers that while they may be looking forward to spoiling themselves and their loved ones – to do so responsibly.
“Many consumers complain that January is a long month, but like many other months, January also has 31 days. What makes it longer though, is how you spend your money during the festive season,” said Acting Manager for Education and Communication at the NCR, Advocate Kedilatile Legodi.
Advocate Legodi reminded consumers that some will receive their December salaries earlier than usual while others will be receiving bonuses.
“Often times, bonuses present a great temptation to buy more, however, consumers are strongly encouraged to draft a budget to ensure that they spend what they have. Consumers are further encouraged to get into a habit of allocating a portion of their budget to savings,” she said on Wednesday.
Legodi reminded consumers that the salary paid in December, is the same income that has to cater for January expenses such as school fees and school uniforms.
“Failure to consider January expenses before spending during the festive season, will indeed make January feel longer and financially stressful,” she said.
Reckless spending over this period without due consideration of January which is a few weeks away, may lead some consumers directly into the trap of unregistered credit providers informally referred to by many as “Abomashonisa”.
The NCR, which is responsible for the regulation of the South African credit industry, said desperation to borrow money in order to cope with January expenses can make consumers the target of unregistered credit providers.
Unregistered credit providers usually advertise their services using phrases such as “Blacklisted consumers welcome” and “cheap credit”.
They often also require a consumer to pay a fee before they pay out the alleged approved loan.
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.
“Consumers are advised to only use NCR registered credit providers and report those that retain their instruments such as bank cards to the NCR,” said Legodi.
Consumers should remember that credit is expensive as it includes interest, monthly service fees, once off initiation fees among others.
“Spending wisely during the festive season, will alleviate the need for consumers to borrow money in January,” concludes Legodi.
Meanwhile the NCR also had the following tips for the festive season:
- 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.
The NCR is an agency of the Department of Trade and Industry.