Many people have already maxed out their credit cards
Consumers who collectively owe more than Ri.7i-trillion in outstanding debt should guard against ratcheting up even more debt over the Christmas holidays.
Neil Roets, CEO of one of South Africa’s largest debt counselling companies, Debt Rescue, said having spent copiously on Black Friday and Cyber Monday, many consumers had already maxed out their credit cards and store cards and were now thinking ofborrowing money from lenders in the form of unsecured loans to fund their Christmas spending.
“Unless you have budgeted for Christmas presents and New Year’s goodies, think twice about increasing your debt load,” said Roets.
“While it is true that some retailers have great specials going on over the holiday season, the reality is that loans have to be repaid and there are substantial expenses waiting in Januar y and Februar y in the form of school fees, university payments, school uniforms and much of the debt that had been stacked up in November.
“Retailers are going the extra mile this holiday season to tempt consumers with extra special deals because they themselvesare in trouble because of a tight economy that has reduced their margins and shrunk their turnovers to the point where they desperately need to sell more goods.”
Roets said many consumers had great difficulty adapting to the new reality of rising interest rates and high unemplo yment, believing that somehow their economic circumstances would magically improve.
He said now was the time to consolidate and build up cash reserves to guard against unavoidable cost of living increases next year. “We know for sure that inflation is on the rise and there is definitely going to be a substantial increase in the price of fuel, perhaps by asmuchas 40 centsa litre.
He said there should be a difference between what consumers wanted and what they actually needed, adding that January was when Debt Rescue saw the influx of distressed consumers who had reached the end of their financial tether and had debt collectors knocking on their doors.