FAQ

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It is an option to use your credit card as a normal bank account. Banks are able to accept deposits into a credit card account; however, you will need to check with your employer that they are able to make payment into a credit card account as many insist on a saving or current account. You also need to keep in mind that the 16-digit number on your credit card is not always the same as the account number, so, for example if your card is lost/stolen/replaced the 16-digit number will change. This means that you will have to notify your employer of these changes to ensure your salary is paid into the correct account.
 
Using your credit card as a transactional tool – if you are pre-funding the balance and don’t use your limit – means you won’t have to pay debit interest. The same is also true if you pay the outstanding balance on your statement in full each month on or before the payment due date (within 55 days). You can also benefit from a higher earn rate on your rewards programme and build a solid credit history. If you use the account as a savings account, and keep a credit balance, you can earn credit interest. This is often a tiered rate depending on the amount. It’s wise to compare the interest on a savings account with a credit card to ensure you get the best rate.

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The responsible use of your credit card account including the budget facility certainly can improve your credit rating over time. By enabling an automated minimum repayment and managing your balance within the limit you are building a track record as a low risk borrower that will assist you throughout your life, from buying that first home or car to starting a business. The budget facility is used for purchases and cash advances that can be repaid over six to 60 months. Credit card users can buy as many items as they wish on their budget facility as long as they have credit available in their account. However, there are transactions that cannot be made using the budget facility such as bond instalments, petrol payments and electronic account payments. Budget purchases are subject to interest rates from the date of the purchase and instalments must be made in full every month while the straight facility provides you with up to 55 days interest free credit when paying the outstanding balance in full and on time each month.

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There are some banks that have changed their risk acceptance criteria to accommodate customers with low credit scores. However, the best way to find out if you can get a credit card is to consult a financial planner at your bank. They can assist you with the application process as well as advice on the best form of credit to suit your needs. A personal loan may be an option, but in this case you will be charged interest on your loan, depending on the agreement you come to with your bank.

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Yes you can have more than one type of loan at the same time - but before you apply for the short term loan check the required monthly payments for both loans and make sure you can afford paying both off at the same time – If you can’t afford both repayments then don’t take the short term loan.

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The loan amount you qualify for depends on a whole host of different things and it is determined by your credit profile. So, the simple answer is: we can’t tell you until you have done an application and your credit profile has been assessed.

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All DirectAxis loan applicants must possess a valid bar-coded South African Identity document. In the instance where an applicant is approved for an amount of more than R15 000, the following documents are required:
•  A certified copy of the Identity document 
•  Proof of residence (not older than three months)
 
For self-employed customers these additional documents will be required:
•  Three months bank statements (not older than three months)
•  Proof of employment

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The interest rate is normally calculated as what discount you get off the "prime interest rate". This discount will depend on your "risk profile", which is calculated depending on your credit score, Loan to Value and affordability.

Due to the economic climate the banks are tightening up on the discounts they offer, with prime less 1.6% probably being the best available at the moment.

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It is always advisable to keep the bond open once fully paid up. This is purely in the event that you want tong to access funds at a later stage. Also, bonds in general have a cheaper interest rate than personal loans. Ensure that your bond is an Access Bond and keep the bond open by paying in the monthly admin fee.

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This will entirely depend on your individual situation as to how straight forward the application is.

For example a salaried individual with no existing debt and asking for a small "loan to value" mortgage will be quicker than a self employed individual asking for a high loan to value mortgage. In general it will take between one and three weeks for us to hear back from all the lenders to ensure you have the best deal available.

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It is an option to use your credit card as a normal bank account. Banks are able to accept deposits into a credit card account; however, you will need to check with your employer that they are able to make payment into a credit card account as many insist on a saving or current account. You also need to keep in mind that the 16-digit number on your credit card is not always the same as the account number, so, for example if your card is lost/stolen/replaced the 16-digit number will change. This means that you will have to notify your employer of these changes to ensure your salary is paid into the correct account.
 
Using your credit card as a transactional tool – if you are pre-funding the balance and don’t use your limit – means you won’t have to pay debit interest. The same is also true if you pay the outstanding balance on your statement in full each month on or before the payment due date (within 55 days). You can also benefit from a higher earn rate on your rewards programme and build a solid credit history. If you use the account as a savings account, and keep a credit balance, you can earn credit interest. This is often a tiered rate depending on the amount. It’s wise to compare the interest on a savings account with a credit card to ensure you get the best rate.

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It depends from insurer to insurer. If the current insurance company has a list of approved panel beaters on their panel, they can insist that a client uses them for factors such as guarantee of work and the contract between the insurer and panel beater. However, should the client feel that the panel beater is not up to standard and insist on using their own panel beater, they should request this in writing and address this to the claims manager. He/she will make a decision based on the factors provided by the client. The insurer can then choose to accept the choice of the client. But should this result in defective workmanship, the insurer will not be held responsible as they do not have a guarantee agreement in place with that panel beater.

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Insurance is made possible by a large number of people sharing a common risk pool. The Insurer collects premiums, which they invest and hold in order to pay out claims.

Every member of the pool has to contribute in a fair way to ensure that the funds are not depleted by too low receipts.

Over decades the insurers’ actuaries have collected statistics about the factors that would cause risk of mortality to differ between people. Some of these are smoking, obesity and alcohol abuse.

This specific examples causes medical conditions to arise, and also accelerates and magnifies the scope of others. As an example, smoking can cause lung cancer, as well as worsen pneumonia. Obesity can cause heart attacks, as well as cause and worsen joint problems. Alcohol can destroy the liver, as well as heighten the odds of accidental death or injury.

The insurer therefore has to charge a loading on the premium to factor in the increased risk. As one gets older the penalty becomes more severe, because the risk increases with age. Ultimately these penalty premiums can negatively impact one’s lifestyle, as the amount of life cover can effectively cost more than triple that of an unloaded premium. You would either than have to pay much more, or lower the cover available for you and/or your dependents.

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As a rule it is virtually impossible to find a company that will accept a client at this advanced age. Insurance is all about risk pooling and pre-funding. As age rises so the mortality rates increase. Therefore octogenarians are a bad risk for Insurers all round, as in general they would be part of the pool for a shorter period than, say a 30 year old. I have identified one company. I do not know them and cannot endorse them or their product. They are however 80% owned by Assupol, which is well known. Their contact details are: Prosperity Life, 011 760 1416.

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Suicide, attempted suicide or self-inflicted injury.

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A retirement annuity is a good option for retirement savings if you do not have the option to join an employer provident or pension fund, as contributions can be deducted from your income for tax purposes.
 
Currently you can deduct contributions to a retirement annuity from your taxable income up to the greater of:
·         15% of your non-retirement funding taxable income per year
·         R3 500 less current deductions to a pension fund, or
·         R1 750
 
As you do not belong to any retirement fund, you should be able to deduct contributions equal to 15% of your taxable income. This percentage is expected to increase from 1 March 2016.
 
On a Retirement Annuity you can take up to one third of your proceeds in cash at retirement. The rest must be used to purchase a life or living annuity to provide you with income.
 
It is important to ensure that your retirement savings work for you by earning a decent return in excess of inflation. Most retirement annuities have a range investment options available, offering different levels of risk and investment return. Make sure you invest through a reputable institution, as your retirement investment must still be around when you retire.
 
Determining how much you should contribute and deciding on an appropriate investment strategy can be complex.  A registered financial advisor will be able to provide you with advice appropriate to your specific situation.

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A retirement annuity is an alternative to a pension fund for individuals that want to provide for their own retirement.
 
You can deduct contributions you make to a retirement annuity from your taxable income, up to  the greatest of: 15% of your non-retirement funding income; or R 1,750; or R3,500 less current pension fund contributions.  If your employer does not have a pension or provident fund, you will therefore be able to deduct contributions of 15% of your income from your taxable income.
 
At retirement, you can take up to one-third of the proceeds in cash.  The rest must be used to purchase an annuity income.

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There are a number of factors to consider when you compare these options:

  • Paying off your bond sooner provides a tax-free return equal to the interest rate payable on the bond.  To evaluate the return on this investment, you should compare the interest rate you are paying on your bond with the investment return you would expect to earn in the new Provident Fund.
  • Taking the Provident Fund lump sum in cash will have tax implications, compared to transferring it to a new Provident Fund or a Preservation Provident fund.
  • The additional monthly payments into the new Provident Fund may cause the total contribution to exceed the amount you can get tax relief on.
  • If you do decide to pay the Provident Fund lump sum into your bond, you must make sure that you remain disciplined in paying the excess into your new Provident Fund or a Retirement Annuity.

A registered financial advisor will be able to help you compare the available options, taking into account the tax implications and determining the most appropriate solution for your specific circumstances.

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In order to determine the most appropriate retirement income strategy for you, one would need to look at your total financial situation, e.g. whether you have any dependents and any other investments or sources of income.  A critical factor to consider is your current age, as the income from your retirement fund will need to last for your whole life.

There are a number of potential threats to your income and financial security post retirement:
• You may outlive your income
• Your income may not keep up with inflation, so that your standard of living declines
• Negative market conditions may impact your investments and/or income

A fixed pension will provide you with an income for life, but it is critical that you purchase one with annual increases in income, preferably linked to inflation; otherwise your income will not keep up with your living expenses.

A living annuity does not provide a guaranteed income for life, but do allow more flexibility with regards to the level of income you withdraw (between 2.5% and 17.5% of the investment value at that point). However, if the initial level of income selected is too high and increased annually by inflation, the withdrawal percentage will at some point be capped at the maximum, after which it will not be possible to increase income by inflation any more. Income may even start reducing.

A wide range of investment funds are available for living annuities.  Choosing an appropriate investment strategy is important, as you will need to balance earning an investment return that can support annual increases in income, and limiting the volatility in the investment value. A significant fall in investment values may have serious consequences for the level of future income that can be sustained.

Retirement income choices are complex and the decisions you make will have serious implications for your financial security in retirement.  It is therefore recommended that you speak to a registered financial advisor that in order to determine the most appropriate strategy given your specific situation.

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Despite voluntarily removing yourself from Debt Counselling, your credit score will still reflect poorly because your accounts are most probably not up to date. You will need to rebuild your credit worthiness and prove that you are worthy of credit again. In terms of your debt review status, you will need to contact your debt counsellor to ensure that they have updated their systems and notified the credit providers by sending the 17.W form. The credit bureaus will only change your status once your debt has been paid up. 

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Your debt counsellor should have reduced your interest rates when restructuring your debt repayments. Termination is no longer voluntary as per the changes to the National Credit Act in February 2015. Failure to pay your creditors can result in termination of your debt review which would result in you having to pay the original instalments to your credit providers and possibly the shortfall for the duration you were under debt review.
 
It would be best to communicate with your debt counsellor before making any decisions.

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Whilst under debt review, you will not be able to secure any credit. If you are in need of cash for expenses, it would be best to contact your debt counsellor and arrange for a restructure of your payment plan if possible. With debt review, the idea is for clients to not increase their debt, hence the reason for not being allowed further credit.

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