Consumers, don’t be tempted

When the going gets tough, the tough get going, but as far as South African retailers are concerned it’s more a case of when the economy is tough, they become more cunning.

Many retailers are finding innovative ways in their bid to lure cash- strapped consumers to part with their hard earned cash and in some cases bonuses.

In addition to the normal Christmas and festive season sales, some retailers are offering consumers a chance to buy now and pay later.

A car dealer in Midrand is even offering a free car with a minibus/kombie that it is selling. How much more tempting can it get?

And of course there are the normal festive season sales, wrapped in glitter and lit up by bright Christmas lights. Sales and “massive deals” are on offer for consumers to make the most of their festive season.

But global investment strategist at Standard Bank, Chris Hart, has warned consumers not to be gullible and encouraged them to be smart with their festive season spending. “It’s important to budget and plan your spending in the festive season. January will be hard as a consequence of giving into that pressure,” he said. The National Credit Regulator’s credit bureau monitor showed that unsecured credit agreements increased from R17.4bn in March to R17.45bn in June this year. There was 0.26% increase on a quarter-on-quarter basis. Consumers often spend more than they can afford during the festive season, making use of credit facilities which consist of mainly credit cards, store cards and bank overdrafts.

Statistics compiled by debt management firm Debt Rescue showed that South Africans owed the bulk of their salaries to debtors.

“Consumers owe as much as three quarters (75%) of their monthly pay to creditors, marking a 31% jump in new clients in need of debt rescue in the first six months of the year,” the group said.

Hart said the festive season came with temptation because there was a desire to “have things now”. However, people need to carefully examine their finances. “When the bonus comes at the end of the year, you often think you have a lot more to spend and end up over-spending,” he said. Companies are already campaigning for consumers to spend big, however, the inflation rate increased to 4.8% last month from 4.7% in October and factors like the weak rand and the drought will have to be taken into account. Debt Rescue also found that only about 24% of South Africans had any money left at the end of the month, while 76% were flat broke.

“This is clear evidence that a growing number of consumers are getting ever deeper into debt and need help from debt counsellors to get out from under the debt mountain most of them had accumulated over the past years,” said Debt Rescue CEO Neil Roets.

Roets said that 58% consumers battled to pay off their credit card debt and 56% could not pay off their home loans. He said that consumers were so severely indebted due to a constant rise in cost of living and low salary increases in relation to inflation.

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