April Fools? Not Quite

By Staff Writer
1st April 2010 marks an unhappy day for most South African consumers as Eskom and Metrorail in the Western Cape increase tariffs by 24.8 and 20% respectively.

Luke Hirst, MD of Debt experts Debtbusters, says ‘Consumers are likely to be hit hard. While the increase in Eskom's tariffs is certainly better than the requested 35%, it will still have a huge impact. The basket is only becoming more expensive, with electricity and transport costs soaring, while at the same time emptier than ever due to consumers affordability diminishing. '

‘According to the Credit Bureau Monitor, Q3 figures show 18 million credit active consumers with only 41.2% up to date with their payments - that is 10m people who are in arrears in their debt. We expect a sharp deterioration in the Q4 stats as inflation takes a toll and the level of debt stress increases accompanied by a surge of applications by consumers for Debt Review.'

Finance Minister Pravin Gordhans 2010 budget speech also put a damper on 1.2 million of the population, as he told public servants the salary increases they received in 2009 placed a significant strain on the economy, warning them they won't be so lucky this year.

Hirst continues, ‘Not only are wages decreasing, but 13th Cheques and bonuses seem to be becoming redundant. Labour Law clearly states that the payment or non-payment of bonuses is a matter entirely for the employer to decide, and to negotiate with employees. Consumers need to be aware that despite having received a bonus for the last 10 years, they may not get one this year - or ever again. ‘

For the consumer this means fewer funds available to pay their debt, or if they are under debt review, their rehabilitation amounts. It will most certainly be a tight squeeze between no salary increases, huge inflationary pressure and debt obligations - the result? Banks get less money due to consumers being left no choice but to default on their payments.

‘Some form of relief needs to be given to the consumer. One can only hope an interest rate cut is around the corner when the MPC meets today, this needs to be a cut of at least 2%.'

Recent Articles

Featured Changing from one medical scheme to another - effortlessly

It is coming up to the end of the year and you might be looking to change medical schemes, or options within a scheme in preparation for the new year. While you don’t necessarily have to wait for year-end to do so, providers often recommend it.

Read more

Your guide to financially surviving Christmas

There are a few times each year where you need to dig deeper into your pocket and spend more money such as birthdays, anniversaries, and the Christmas period. Whether you celebrate this religious holiday or not, the festive period - depending on how you choose to spend it - means increased travelling, buying of gifts, entertaining, and eating out at restaurants.


Read more

Trump, Trump and a little bit of South Africa

What a November we had, with the rand staging one of its best months and closing below the R14.00 level. To be honest, this looked like quite a far-fetched possibility at one stage during the month. It seems that the tide has changed a little, even though it might be short lived since the US dollar bulls are not so sure of their case anymore.

Read more

Momentum vs. The people: Who is at fault?

This week has seen insurance giant Momentum in the hot seat as debate sparked around its initial refusal of a R2.4 million life insurance pay-out. The deceased was killed in a hijacking but lost the right to claim upon failing to disclose a raised blood sugar condition at the inception of the policy, in 2014. Momentum has since agreed to the pay-out.

Read more

Sign Up

To our weekly newsletter for advice you can bank on

Deals

Free iCollege Scholarship

Price: R600
When: Until 16 May 2019
Where: Nationwide

Telkom December Big Deal

Price: R459 pm
When: Until 31 December
Where: Nationwide

Money Savvy Kids Giveaway

Price: R450
When: 8 December
Where: Johannesburg (Milpark)