Guiding consumers since 2009

Rate cut welcomed, but err on the side of caution says experts

By Staff Writer
The Reserve Bank's 50 basis-point cut to the repo rate on Thursday was welcomed by most but experts urged consumers to err on the side of caution.

"I sincerely urge consumers to act with great caution when considering a new loan," said FNB CEO Michael Jordaan.

"Consumer confidence is already at high levels, indicating that consumption could escalate. However, we should bear in mind that interest rates could increase during 2011 in reaction to inflationary pressures that are already appearing on the horizon."

In contrast, DebtBusters, a debt management company, welcomed the cut.

"We are very pleased to see a further rate cut by the Reserve Bank at this meeting, and this will certainly help those who are struggling to pay their debts," said DebtBusters MD Luke Hirst.

"There are still too many households falling behind on their bond repayments, and this is going to be welcome relief."

He said there were over 8 million South Africans in arrears of three months or more.

Hirst warned consumers not to go on a "spending spree this Christmas", but to rather use the money saved through interest rate cuts on paying off debt.

"Interest rates may have further room to go down, but at some point rates will start going up and consumers do not want to have large debt balances when that happens."

Recent Articles

Featured Travel ban – how to claim for the loss incurred

As with the recent Covid-19 pandemic, governments sometimes issue travel bans to prevent people from travelling to other countries. This becomes even more complicated if you’ve already planned and paid for your trip. Your flights will be cancelled, and you may lose money from cancelled accommodation arrangements. How do you claim for the financial losses incurred due to a travel ban?

How to finance and insure a second-hand vehicle

Buying a second-hand vehicle may suit your budget better than acquiring a new one. But what impact does an older model have on vehicle finance and car insurance? We reached out to specialists in the field to explain what the financial implications are of pursuing a second-hand vehicle.

Reading your loan agreement: look out for this

Many people don’t read their loan agreements. They just sign on the dotted line without realising that they could be signing their lives away. But it’s important to review your loan agreement before and after taking your loan to avoid future setbacks.

 

Part 1: The difference between good and bad debt

In the first part of our Debt-ucate series we explore the difference between good and bad debt and why debt is, in fact, necessary.

Deals

Udemy online course for R180

Price: R180
When: Until 27 March 2020
Where: Online

Educate your kids for free with Skills Share

Price: Free
When: Daily
Where: Online

Take advantage of payment holidays from Standard Bank and Nedbank

Price: Free
When: From 1 April to 30 June 2020
Where: Nationwide