Demand for personal loans over the festive period has soared as people feel the pinch from interest rate hikes and holiday spending, according to Justmoney.co.za, South Africa's guide to money.
And in a report in the Cape Argus and IOL.co.za, The National Credit Regulator (NCR) agrees that activity in the personal loan market has increased over the festive period.
Applications for personal loans, credit cards, debt consolidation and mortgages on the Justmoney.co.za website increased by more than ten-fold in the run up to Christmas - including a handful of applications on Christmas Day itself. And activity is growing again as many people return to work after the festive break.
Paul Beadle, general manager of Justmoney.co.za, explains: "This is an expensive time of year and the recent increase in interest rates has only added to the cost for many consumers. It's clear from the number of people searching for loans and cheaper credit cards on the Justmoney.co.za site that many consumers either need to borrow money or are looking to reduce their existing repayments.
"The website has been extremely busy in the lead up to the festive holiday, with people comparing credit cards and insurance premiums, applying for personal loans or just looking for debt guidance. We even had significant numbers of visitors on December 25th and 26th when most people are relaxing with their families."
The impact of higher interest rates is echoed by a poll carried out by Justmoney.co.za in the wake of the latest hike. 83% of those polled said the increase was too high and would cause consumers to suffer, whilst 9% thought the last hike was just right, with the remaining 8% saying the rate increase was not high enough.
Beadle says people should take control of their debts before they get out of hand in the New Year. He says: "The first step is to stop spending! Next, it is crucial that people review their debt situation - this could be as simple as getting a cheaper credit card or just shopping around for lower cost banking and insurance premiums.
"For many others, they need to look at restructuring their borrowing, perhaps via a lower cost personal loan or debt-consolidation if they own property. The most important thing is that people take action to get their debts under control as it is likely there will be another interest rate jump early in 2008, making life even tougher."
Justmoney.co.za poll results in full:
What do you think of the latest interest rate hike?
83% - It's too high - consumers will suffer
9% - Just right - any higher would harm the economy
8% - Not high enough - spending still needs to be curbed
Justmoney.co.za has been created to help South African's save money by demystifying financial services and helping them to make informed decisions about their money.
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